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Why oil-rich Venezuela is suffering severe gasoline shortages

May 22/2020

MOSCOW (MRC) -- At least five Iranian tankers carrying fuel are currently en route to gasoline-starved Venezuela, which has the worlds largest crude reserves. The United States, which maintains sanctions on both OPEC members, is weighing a response to the supply, said Reuters.

State oil company Petroleos de Venezuelas refinery network has the capacity to produce 1.3 million barrels per day (MMbpd) of fuel. But after years of underinvestment and lack of maintenance, those refineries processed just 101,000 bpd of crude and produced just 7,000 bpd of gasoline in March, according to an internal PDVSA document.

The South American countrys gasoline consumption has dropped significantly in recent months due to a quarantine designed to stop the spread of the coronavirus. Authorities are distributing just 30,000 bpd of gasoline to service stations across the country, according to an industry source, compared with pre-lockdown consumption of about 170,000 bpd.

In recent years, PDVSA has accepted imported fuel as payment for its crude exports. But these so-called swaps with its main partner, its U.S. refining subsidiary Citgo, were interrupted when the Trump administration sanctioned PDVSA in January 2019 as part of its bid to oust Maduro, a socialist.

Since then, Washington has also pressured PDVSAs other trade partners, such as Spains Repsol, Italys Eni and Indias Reliance, not to supply gasoline, though they had been given permission to ship diesel, which is seen as necessary for distribution of food and other vital goods.

The shortages grew far more severe after Russias Rosneft, which in 2019 became the main intermediary for Venezuelas crude and its main fuel supplier, halted operations in the country in March, after Washington sanctioned two of its trading units for dealing with Venezuela.

PDVSA is trying to restart the catalytic cracking units - which are fundamental for gasoline production - at the 146,000 bpd El Palito refinery and the 310,000 bpd Cardon refinery, which has received materials to help its restart via plane shipment from Iran.

In addition to the pending imports of fuel from Iran, the country received a 150,000-barrel shipment of gasoline in late April from Maroil Trading, a Venezuelan fuel magnate who in 2002 had come to late President Hugo Chavezs rescue by shipping gasoline to the country during a PDVSA strike.

Ethylene and propylene are feedstocks for producing PE and PP.

According to MRC's ScanPlast report, Russia's estimated PE consumption totalled 383,760 tonnes in the first two month of 2020, up by 14% year on year. High density polyethylene (HDPE) and linear low density polyethylene (LLDPE) shipments increased due to the increased capacity utilisation at ZapSibNeftekhim. At the same time, PP shipments to the Russian market were 192,760 tonnes in January-February 2020, down by 6% year on year. Homopolymer PP accounted for the main decrease in imports.
Author:Anna Larionova
Tags:petroleum products, crude oil, PP, PE.
Category:General News
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