CARACAS: Venezuela's state-run PDVSA is preparing to recover a portion of the oil output lost in recent months by boosting crude blending operations at its main producing region, the Orinoco Belt, according to sources and a company document.
US sanctions imposed since 2019 have deprived PDVSA of the diluents it imports to produce exportable crude grades. The sanctions have cut off its customer base and the number of tanker owners willing to work with the firm, causing oil exports to fall to their lowest levels since the 1940s and cutting heavily into PDVSA's production.
PDVSA and its joint ventures produced 336,000 bpd of crude at the end of August, internal figures from the company showed. Just a year earlier the nation's output was 933,000 bpd, according to figures reported to OPEC. Venezuela's oil exports are the nation's largest source of foreign revenue.
The full content of the shipment from Iran is unknown, but imported heavy naphtha is also expected to be used as diluent by PDVSA to jumpstart output, one of the sources said. PDVSA is struggling to deliver Merey heavy crude to its customers in Asia and Europe due to quality problems, according to company documents.
The issues, which have caused delays in exports, are forcing the firm to replace scheduled cargoes of Merey crude with other grades, including Hamaca and Leona 24, the documents showed.
PDVSA plans to switch a portion of its Orinoco Belt crude production, currently entirely focused on Merey, to DCO, the sources said. The company also expects to continue draining oil inventories as nearly full storage due to a lack of buyers in recent months forced it to slash output. As of Sept. 14, its stocks of Orinoco Belt heavy crudes had declined to 8.15 million barrels from almost 15 million barrels three months ago.
Three separate vessels carrying Iranian fuel bound for Venezuela - the Forest, Fortune and Faxon - are expected to begin arriving at the end of this month, according to Refinitiv Eikon data, to ease the country's acute shortage of gasoline.