Venezuela Forced to Buy Russian Oil....

[JayB]

....to cover a production shortfall.

 

Leader for Financial Times Article.

 

World / Americas

 

Venezuela buys Russian oil to avoid defaulting on deals

By Andy Webb-Vidal in Caracas

Published: April 28 2006 03:00 | Last updated: April 28 2006 03:00

 

Venezuela, the world's fifth-largest oil exporter, has struck a $2bn deal to buy about 100,000 barrels a day of crude oil from Russia until the end of the year.

 

Venezuela has been forced to turn to an outside source to avoid defaulting on contracts with "clients" and "third parties" as it faces a shortfall in production, according to a person familiar with the deal. Venezuela could incur penalties if it fails to meet its supply contracts."

[dberdinka]

Thats $72.99 a barrel. Maybe Chaves will become a profit mongering capitalist whore by year end at those rates?!

 

So whats the reason.

 

Reserves don't meet projections!

Regressive socialist nation cannot maintain infrastructure?

 

Let me guess...Let me guess.....

[JayB]

Found the rest of the article. I've been hearing for a while that most of the talent in the State Oil Agency has either fled or been purged from the ranks, and that Venezuela's going to have a tough time convincing the people who have the expertise and technology necessary to maintain and/or boost production to put good money after bad in Hugoland.

 

"Documentation obtained by the Financial Times shows that the state-owned Petróleos de Venezuela (PDVSA) made a financing arrangement this month with investment bank ABN Amro to facilitate the purchases of oil from Russia via Rotterdam.

 

PDVSA is believed to have dropped the Dutch bank after the Russian government agreed to provide Venezuela with an "open account" facility to buy the oil.

 

The Ruhr Oel refinery in Germany, in which PDVSA has a 50 per cent stake, may be among the clients that are being supplied with the Russian oil.

 

The tabular content relating to this article is not available to view. Apologies in advance for the inconvenience caused.PDVSA would not confirm on Thursday that it was buying oil from Russia but said a statement would be issued on Friday. The company said it would be "logical" that the Ruhr refinery was sourcing some of its oil from Russia because it would be cheaper than transporting it from Venezuela.

 

One US trader who deals in Venezuelan oil agreed, saying: "We have been expecting PDVSA to start buying [oil from the] Urals for the Veba system for some time. It is possible that they are trying to buy directly from Russian producers."

 

The move suggests a growing gap between Venezuela's declining domestic output and its expanding contractual obligations to international customers.

 

Luis Pacheco, a former planning director of PDVSA, said: "Why would Venezuela be buying crude oil from Russia? I would imagine it would be to meet obligations for light oil deliveries, but they are relatively small. Most of PDVSA's obligations are for heavy oil."

 

Under President Hugo Chávez, PDVSA's oil output has declined by about 60 per cent, a trend analysts say has accelerated in the past year because of poor technical management.

 

Mr Chávez's push to extend his influence throughout Latin America and the Caribbean with promises of cheap oil for friends and allies may be overstretching PDVSA's finances, however.

 

Venezuela currently supplies about 300,000 barrels per day of oil and products to Cuba, Nicaragua and others under favourable long-term financing arrangements.

 

This week, Venezuela signed a deal to send oil to town mayors in Nicaragua aligned with the leftwing Sandinista party.

 

Copyright The Financial Times Ltd. All rights reserved."

[foraker]

Democratically elected leaders does not mean you get intelligent democratically elected leaders. We ought to know a thing or two about that.

[sexual_chocolate]

We'll see the real cause of this at some point, but certainly a possibility is that he is getting a little over-extended in his zeal to develop a viable counter-weight to US/capitalist influence throughout the region.

 

I certainly hope that the generalized sentiment will not become one of viewing Venezuela/oil as the region's saviour, any more than some thought "neo-liberal fiscal policy" would be (I doubt this to be the case).

[willstrickland]

Wouldn't much matter to the US if Venezuela was at full production capacity, because their large fields are primarily very heavy crude and we don't have the refinery capacity to deal with it. The "price of oil" you hear quoted in the MSM is for WTI front month. The various grades all sell at different prices related to the heavy/light sweet/sour characterisitcs...Brent, WTI, etc.

 

"Sweet light" is the ideal, meaning relatively thin, high gasoline yield, less intensive refining required, and low sulfur.

 

Jay, this ran about 3 days and was covered at theoildrum.com, a site I use and recommend. Lots of industry insiders, academics, etc. It's a "peak oil" focused site, but follows all the data releases, news, runs in depth tech articles and so forth. It's not overrun with greens or doomsday types.

[G-spotter]

DEEP HOT BIOSPHERE