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Sunday, October 21, 2018

Venezuela – situation still unstable

The strike in Venezuela continues towards its third week in what appears to be a stalemate between the opposition and President Chavez, and is threatening to cripple the Venezuelan economy. Hundreds of thousands of people have taken to the streets in Caracas and elsewhere, in support of the opposition and demonstrations against the Government and its handling of the crisis. Opposition leaders have stepped up protests this week in response to President Chavez’ rejection of early elections, stating that a referendum can take place in August at the earliest.

The government claims that OPEC countries are firmly supporting its actions and are prepared to cover Venezuela’s crude oil and products commitments, domestic fuel demands and even provide personnel to run the industry. Military authorities are being called upon to disobey judges and prosecutors whose decisions are against the presidential decrees.

The civil unrest has caused the entire economy to slow down, disrupting domestic gasoline distribution and food supply, and concerns are rising of a repeat of the violent clashes witnessed during the April riots this year. Britain, Canada and the USA have issued warnings against travel to Venezuela due to the tense situation.

Venezuela normally produces approximately 2.8 million barrels of oil per day (mbd), of which 2.3 mbd go to export. Production has fallen to 250,000 barrels per day since the strike began and refineries are shut down or operating at very low levels. Only three tankers have left Venezuelan ports since 2 December, compared to 10-12 liftings per day during normal operations, and 40 tankers are reportedly waiting at anchorage. Petrozuata, one of the chief exporters in the Jose complex (Puerto La Cruz/Guanta area) has declared force majeure as of 13 December due to lack of available gas.

The shortfall of Venezuelan oil on the world market has contributed to a spike in oil prices which touched USD 30 per barrel in New York earlier this week. Refineries in the Caribbean are slowing down and Aframax rates in the region have been severely hit. The US is the most important importer of Venezuelan crude, which accounts for 15-17% of US imports, in addition to 300,000 barrels of refined products per day. A prolonged shutdown will inevitably cause consumers to seek replacement oil and products, especially as we are approaching a season of high demand and cold weather.

Government attempts at replacing striking workers with army personnel or taking control of PDV Marina’s own tankers by force, have caused concern over safety levels, insurance coverage and human rights violations. The Venezuelan Maritime Law Association and the Venezuelan Chamber of Shipping have both issued communiqués protesting the Government’s breach of national and international laws and disregard of national court decisions. Jorge Kamkoff, PDVSA vice-president, has criticised the unjustified arrest of PDVSA personnel, attempts of the Navy to take control of PDV Marina vessels and forcing operators to undertake manoeuvres against their will.

INTERTANKO has received reports of dangerous incidents and one master has delivered a letter of protest to the Guaraguao Terminal after a tug made “hard contact” causing damage to the hull of the tanker. Other ships have refused to berth and have left Venezuelan waters.

On 11 December the master of an LPG carrier at anchor off Puerto La Cruz was arrested. The judge of Barcelona, however, released the master who later returned to the ship.

On 15 December units of the army and the National Guard, in an armed military operation, seized one of the PDV tankers at anchor in Lake Maracaibo, loaded with gasoline. The master, however, refused to abandon his ship. Again Venezuelan soldiers stormed this and a second tanker, held the crew at gunpoint and arrested the captains in an attempt to seize control. The foreign crew, which was intended to relieve the original crew, was later disembarked together with most of the soldiers. However, crews are being kept in custody on board guarded by the Coast Guard.

The military actions against ships, which may be repeated against other ships at anchor, cause great concern for the safety of personnel and the environment, and have seriously impacted the oil trades. Several international P&I Clubs are monitoring the situation closely, but have so far not issued any notice of suspension of cover.

INTERTANKO would like to remind members that Venezuela has enacted the so-called “Penal Law of the Environment”, which was used under the “Nissos Amorgos” case and has been severely criticised as it places heavy liabilities on individuals involved in pollution incidents, and in particular on ships’ masters and owners.

An update on the port situation as per 18 December can be downloaded from here.

General: Anders Baardvik, email:
Ports & Terminals: Steinar Digre, email: