Oil companies and aid groups intend to pressure Biden to allow fuel exchanges in Venezuela

(Reuters) – Representatives of fuel suppliers in Venezuela, Venezuelan oil importers and advocacy groups said this month they plan to press US President-elect Joe Biden’s new administration to lift the ban on crude oil trading. for diesel.

The Trump administration has blocked companies since the last quarter of 2020 from sending Venezuelan diesel in exchange for crude oil. These agreements have been exempted for more than a year from sanctions on the state oil company Petroleos de Venezuela SA, aimed at ousting President Nicolas Maduro, who oversaw an economic collapse.

This has raised concerns about the humanitarian impact of a possible shortage of diesel, widely used in Venezuelan public transport, agriculture and as a fuel for generators used as a safety device for frequent blackouts. Farmers are already warning that shortages are hindering sugar harvesting and rice planting.

A more acute shortage of diesel would add to the widespread gasoline shortage in Venezuela, as national refineries work at a fraction of their installed capacity. Washington has not authorized PDVSA customers to supply gasoline to the crisis OPEC nation for over a year.

“Public transport uses a lot of diesel,” said Feliciano Reyna, president of the Caracas-based humanitarian group Accion Solidaria, which focuses on HIV / AIDS treatment and other medical relief activities.

“We hope that the new Biden administration can take a more strategic look at the purpose of sanctions and can lift those that do not change the position of the group in power and instead create problems for the population,” Reyna said.

A spokesman for Biden, who will take office on January 20, declined to comment. Biden labeled Maduro a dictator and advisers said he will likely maintain some sanctions as he sought more consensus among US allies on how to enforce them.

Companies that have frequently engaged in exchanges with US government clearance include India Reliance Industries Ltd, Spain’s Repsol SA, and Italy’s Eni SpA. The permits allowed companies to refine Venezuelan crude in exchange diesel even amid sanctions.

A person close to Reliance said the company sent information materials to Biden’s allies about the potential humanitarian fallout of the diesel trading ban in hopes that the new administration would reinstate the exemption.

“Our goal is to do it on the first day,” said the person, who spoke on condition of anonymity. The person added that the Trump administration turned down a request in November from the company to participate in an exchange offered by PDVSA that would have allowed the company to import Venezuelan crude oil in exchange for diesel.

Reliance did not respond to a request for comment.

A Repsol spokesperson said the company “is in constant dialogue with authorities in Venezuela and the US to ensure the company remains compliant” and said the company “will continue its engagement with the upcoming Biden administration.” . An Eni spokesperson said it was “premature” to comment on the matter.

CONTINUOUS CUBA EXPORTS

Internal PDVSA documents seen by Reuters show Venezuela has received no diesel imports since November, and consultancy Gas Energy Latin America warns that the country’s diesel stocks could run out by March or April. Venezuela is now heavily dependent on Iran for fuel imports, especially gasoline.

A person close to PDVSA’s Paraguayan refining complex said its two main plants together produce about 30,000 barrels of diesel per day; Gas Energy estimates the varied consumption from From 42,000 to 59,000 barrels per day (bpd) in 2020.

PDVSA’s 1.3 million barrels per day refining network is running at minimal capacity after years of underinvestment and mismanagement, while PDVSA has continued to export some diesel to Venezuela’s political ally, Cuba, according to to a long-term supply agreement.

PDVSA’s diesel shipments to Cuba averaged around 4,000 bpd in the last three months of the year, a small fraction of the total 75,000 bpd it sent to the island during that time period, as PDVSA internal documents show. .

Elliott Abrams, the US State Department’s special representative for Venezuela, pointed to these shipments as a sign that “the regime believes its supplies are sufficient.”

Neither PDVSA nor Venezuela’s information or oil ministries responded to requests for comment.

Neither the State Department nor the Treasury Department, which applies the sanctions, responded to requests for comment.

The Washington Office for Latin America (WOLA), a rights group, sent Biden’s transition team a policy note recommending that his administration re-establish trade between crude and diesel.

“Even if Maduro stops sending anything to Cuba, it’s a matter of months before the country runs out of diesel,” said Geoff Ramsey, Venezuela’s director of WOLA. “The people who will be most affected are the population”.

Reporting by Luc Cohen in New York; Additional reporting by Marianna Parraga in Mexico City, Nidhi Verma in New Delhi, Matt Spetalnick in Washington, Isla Binnie in Madrid and Stephen Jewkes in Milan; editing by Diane Craft