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Venezuela rations diesel supply to truckers as shortages worsen

VALENCIA, Venezuela/MARACAY, Venezuela — Venezuelan state oil company Petroleos de Venezuela (PDVSA) has begun rationing diesel to truckers, four transport sector sources told Reuters, as low domestic refining output and scarce imports amid US sanctions squeeze fuel supplies.

Frustrated truckers blocked a highway in the central state of Maracay in protest over the shortages on Friday, social media images showed. Industry groups said the unprecedented rationing would create delays delivering goods to markets in the OPEC nation, reeling from a prolonged economic crisis.

The diesel squeeze came after the country suffered widespread gasoline shortages throughout 2020, prompting President Nicolas Maduro to cut longstanding heavy subsidies and import gasoline from Iran. Diesel is still distributed to truckers free of charge.

Before the recent crisis, cheap and abundant fuel had long been taken for granted in Venezuela, home to the world’s largest crude reserves.

“We are talking about an unparalleled difficulty in recent times,” said Jesus Rodriguez, president of the chamber of commerce for the central city of Puerto Cabello, home to Venezuela’s largest container port.

The diesel shortages and transit snags come after Venezuela’s economy contracted more than 63% between 2013 and 2019, according to the International Monetary Fund, as a collapse in oil prices following years of expropriations by successive socialist governments spurred hyperinflation.

That collapse has led to a humanitarian crisis marked by shortages of food and medicine, prompting 5.4 million Venezuelans to emigrate, according to the United Nations High Commissioner for Refugees.

Jonathan Durvelle, president of the Regional Freight Chamber representing truck drivers, said service stations were limiting diesel supplies to between 100-200 liters per truck, and that many drivers have to wait in line for three days to receive fuel. Most tanks can hold at least 1,200 liters, he said.

“If we cannot move our vehicles, we cannot move products,” Mr. Durvelle said.

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

The shortages come after the United States last year barred oil companies from supplying PDVSA with diesel in exchange for crude, part of the Trump administration’s escalating sanctions on the company in its unsuccessful bid to oust Mr. Maduro, who Washington says rigged his 2018 re-election.

Diesel suppliers including India’s Reliance Industries Ltd. and advocacy groups concerned about the humanitarian impact of shortages have urged new US President Joseph R. Biden to lift the ban on so-called diesel swaps. Venezuela has not received a cargo of imported diesel since Reliance’s final shipment arrived in November, Refinitiv Eikon data show.

A White House official told Reuters last week the administration was in “no rush” to ease sanctions in the absence of concessions by Mr. Maduro, who says the 2018 vote was free and fair and blames US sanctions for the once-prosperous nation’s woes.

Private estimates place Venezuelan diesel consumption at between 35,000 and 49,000 barrels per day (bpd). Diesel is also widely used in agriculture, electricity generation and public transit. Farmers have warned for months that shortages were jeopardizing the planting and harvesting of crops.

The 400 km (250 mile) round trip between Puerto Cabello and the capital Caracas requires at least 400 liters of diesel, according to Jose Petit, president of the Asotracontainer industry group representing Puerto Cabello truckers.

PDVSA’s 1.3 million bpd refining network — operating at a fraction of its capacity after years of underinvestment and lack of maintenance — produced around 37,000 bpd of diesel in February, according to Antero Alvarado, Venezuela managing partner for consultancy Gas Energy Latin America.

PDVSA also had around 4 million barrels of diesel inventories in February, Mr. Alvarado said.

A worker at PDVSA’s Paraguana refining complex, who spoke on condition of anonymity, said the company was prioritizing gasoline output over diesel production. — Reuters

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