Two of the tankers Navarik analysts have been following since before they left PADD 3 ports bound for Venezuela have been sitting idle for longer-than-expected durations. With the country battling a foreign reserves crisis, it appears that cash-strapped PDVSA has been unable to settle the trades and be able to bring the barrels onshore. This wait is above and beyond not only the year-over-year average wait times for clean product tankers for the previous 3 months (May, June, and July), but above the average wait times for this year’s previous 3 months.
The vessels are carrying almost 600 000 barrels of gasoline combined, meaning that from a macroeconomic standpoint if these trades were settled they would contribute to a further reduction in foreign reserves. PDVSA might be understandably prioritizing the importation of refinery feedstocks, which is so desperately needed after the reported throughput of their refineries has plummeted amid the global oil price rout and the country’s deepening socio-economic crisis. This is necessary not only from a jobs perspective (considering PDVSA is a key parastatal lever for the socio-economic objectives of the Maduro government) but also since this could entail further resale of the refined products or byproducts that could recoup some foreign reserves.
The layup time (between the estimated arrival time and the completion of the discharge) for the months of May, June, and July 2016 amounted to slightly over 7 days, whereas 2017 arrivals in Venezuelan waters (excluding these two vessels) for the same time frame has so far increased to 8.5. This alone is noteworthy, but the 2 vessels have been waiting on average 11 days, and are still waiting. The possibility that they will continue to wait is non-negligible.
What should investors take from this? That PDVSA is indeed in dire financial straits; they appear to be decreasingly able to bring products onshore and this will could well affect the availability of consumer fuels in an economy already in decline. If crude prices rise, PDVSA may soon have enough cash to bring in cargoes like these, but if not, expect drastic action either on the part of consumers in Venezuela or from PDVSA itself in finding cash elsewhere – such as further sales of Citgo shares or oil-for-loan deals.
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