Venezuela’s state-owned PDVSA is considering a declaration of force majeure on some of its oil supply contracts in June unless its clients agree to accept volume reductions of up to 50%, Argus reported on Tuesday, citing PDVSA officials.
PDVSA ”in the best case only has about 695,000 (barrels per day (bpd) of crude supply available for export in June,” a PDVSA marketing division executive told Argus.
PDVSA’s tumbling crude production, chronic breakdowns of its heavy crude up-graders and difficulty importing critical light crude and naphtha are progressively reducing the amount of oil available for export, Argus said.
PDVSA is asking its principal clients that are collectively owed 1.5 million bpd of crude in June to accept smaller volumes and restructure existing supply contracts for up to one year, Argus said.
Maintenance will last through the end of June and PDVSA clients that reject new deals with supply haircuts could see all of their Venezuelan supplies suspended until the circumstances obliging PDVSA to declare force majeure are resolved, one of the PDVSA officials told Argus.