Venezuela’s state-held oil company PDVSA – which has been barely avoiding default recently – is months behind on shipping crude oil and fuel to China and Russia under oil-for-loan agreements with its key political allies, Reuters reported on Thursday, citing internal PDVSA documents it had reviewed.
The shipments that PDVSA has failed to deliver to Chinese and Russian state-held companies are worth around US$750 million, a Reuters analysis has shown.
Russia and China have extended at least US$55 billion in credit to Venezuela, whose only foreign-exchange cash cow is PDVSA.
Venezuela’s socialist government has been using loans from China and Russia to finance social investments and infrastructure. But now the situation is so dire, and economy is collapsing with inflation and currency devaluation reminiscent of Weimar Germany.
Still, analysts believe that China and Russia would most likely discuss the delayed shipments discreetly via diplomatic channels.
But it’s not only government deals that PDVSA has not been honoring. According to documents seen by Reuters, between October and January, the Venezuelan company canceled or delayed shipments to commercial buyers – including regular customers like U.S. Phillips 66 and Thai TIPCO Asphalt – of nearly 7 million barrels of crude oil, due to rescheduled or skipped cargoes, often because it did not have enough oil available.
Last month it emerged that more than 4 million barrels of Venezuelan crude oil and fuels were stuck in tankers in the Caribbean because PDVSA could not afford to pay for cleaning dirty tankers and port inspections.
Credit rating agency Fitch said last week that PDVSA’s default is probable, and it seems now that it is only a matter of time.
By Tsvetana Paraskova for Oilprice.com