PDVSA's Struggle Amid US Sanctions: A Looming Operational Crisis

PDVSA, Venezuela's state energy company, faces an operational crisis as US sanctions severely limit oil exports. Residual fuel inventories are piling up, and extreme measures are being taken to prevent refinery shutdowns. The company explores alternative storage solutions amid stringent US blockade efforts.

Venezuela's state energy company, PDVSA, is caught in a severe operational crisis. Accumulating residual fuel inventories are pushing PDVSA to adopt drastic measures to prevent the shutdown of its refining units, according to four sources. A US blockade, aimed at toppling Venezuelan President Nicolas Maduro, has seen tankers under sanctions restricted from entering and leaving the country, cutting exports to a trickle.

Since the US Treasury Department imposed sanctions in 2020, PDVSA has relied on intermediaries to send oil to China, utilizing ships under sanctions and a "shadow fleet" that obscures their locations. These efforts are now hampered as the blockade deters even non-sanctioned vessels. The operational chaos at PDVSA is its most severe since the sanctions began, compelling the company to seek extreme solutions.

PDVSA has been forced to revive idled tanks and send residual fuel to oil waste pools in western Venezuela to avert shutdowns at the 955,000-barrel-per-day Paraguana Refining Center. With storage options dwindling, PDVSA faces an uphill battle. Despite ongoing challenges, Venezuelan officials insist the country will continue its oil production and export activities.