In 2006, Petroleos de Venezuela (PDVSA) was in the market to buy 42 tankers to replace its fleet by the end of 2012. PDVSA’s objective was to transport 40% of the company’s production with its own fleet and ultimately reorient its export market to Asia — more specifically, China. Unfortunately, the company has had some difficulty in achieving its goal (cf.: Marianna Parraga, “Despite Launch Parties, Venezuelan Oil Tankers Never Sail“, Reuters, 01.10.2013).
Last September, satellite imagery showed many of Venezuela’s oil tankers ordered from builders around the world still at their respective shipyards. Delivery dates slipped and tankers made by Iran, China, and Argentina never made their way to PDVSA, a development chalked up to financial difficulty. In fact, by October 2013, the company launched a USD 4.5 billion bond sale, its second largest offering to cover additional operating costs with yields at the time around 17%. Of course, with the company in dire straits, the move wasn’t surprising. Venezuela has very little operating space since petroleum represents 96% of all Venezuelan exports and the only source of hard foreign currency. According to state figures, Venezuela produces 2.9 million barrels of oil per day, though only 2.5 million barrels if discounting foreign partners. Even when taken as a whole, over the last decade production has been dropping. To make matters worse, explosions at refineries in 2012 damaged more than 12 storage tanks, forcing it to move vessels around domestic ports to store crude, which affected exports throughout 2013.
However, things may be starting to look better. Historical satellite imagery acquired during February and April 2014 suggests Iran was able to deliver its first Aframax tanker, the Sorocaima, to what we assume was Venezuela. Perhaps as an indicator, Venezuela’s state owned oil company had to issue another USD 5 billion in bonds to state banks in May 2014–though with a much better yield of 6%, according to Bloomberg reports. Unfortunately satellite imagery in May 2014 did not show additional construction activity on the next Aframax which may suggest Venezuela has cancelled the remaining order. Time will tell as the next vessel’s keel was still located next to the dry dock.
Other shipyards may not be so lucky. Additional imagery from December 2013 shows the Eva Peron, one of Venezuela’s Very Large Crude Carrier (VLCC) still at Argentina’s Río Santiago shipyard, a location 31 miles southeast of Buenos Aries. Complete with its deck house, the vessel was berthed at the fitting out wharf not far from a second VLCC — probably the Juana Azurduy — being assembled in a nearby end-launch slipway. The Juana Azurduy was also being built for Venezuela and was supposed to launch sometime later this year. While we do not have updated imagery for 2014, it is currently thought that PDVSA has not acquired the Argentine-built ship. As evidence, several online tracking platforms which follow a vessel’s Automatic Identification System (AIS) had no data for the Eva Peron, though they did show that it was registered to Venezuela.
Moving further afield, there’s the Chinese-built Carabobo, a VLCC launched in October 2012 at the Bohai shipyard following the delivery of the Chinese-built Ayacucho. It would appear this vessel was delivered to CV Shipping, Venezuela’s joint venture with PetroChina based out of Singapore, on 10JUN14. The ship’s AIS shows it flies the Singapore flag and that it made a port call at the city state on 26JUN14 shortly before setting off to the Persian Gulf. As of 21JUL14, the vessel was making its way back through the Strait of Hormuz to an as-of-yet unknown destination. While very little else is known at this time, it is thought this vessel may have been handed over earlier than the Argentine-built VLCC due to China and Venezuela’s oil for credit agreements.
The acquisition of these vessels reinforces Venezuela’s reorientation to Asia as it tries to build up its own fleet. In so doing, it continues to cut oil exports to the United States, despite a lower netback from its strategic partner, China, a trend we should continue to see in the short-to-long term. To further strengthen these ties, by the end of 2013, China extended a USD 5 billion line of credit with the China Development Bank and proposed building a new port for Venezuela’s state petrochemicals company Pequiven.