Crisis at Venezuela’s PDVSA deepens as Caribbean debts pile up

Fri Oct 28, 2016 1:29am EDT
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By Marianna Parraga

HOUSTON (Reuters) - Unpaid debts and broken promises are making Venezuelan oil giant PDVSA an outcast in several Caribbean countries where it had been a guest of honor.

The state-run company's crumbling finances are causing operational disruptions across one of its most essential regions, according to internal company documents, six sources with knowledge of its operations, and Thomson Reuters vessel-tracking data.

Business partners in the island nations of Curacao, Bonaire, Jamaica and the Bahamas are turning away from the firm as debts pile up to tugboat operators, ship brokers, maritime agencies and terminal owners, the sources and documents show.

The company's problems include blocked loading operations in the Bahamas and threats from the governments of Curacao and Jamaica to replace PDVSA as a partner of refineries in both places. Many vessels are also anchored offshore, blocked from discharging cargoes at ports because PDVSA has not paid suppliers and business partners.

The mounting Caribbean problems are adding to a broader crisis for PDVSA, which is already reeling from declining production, low crude prices and an unprecedented economic downturn at home. The company saw operating cash flow plummet by 63 percent, to $2.1 billion, in the first quarter compared to the same period a year earlier, according to its most recent financial report.

PDVSA's Caribbean operations represent a quarter of its global refining capacity and serve as a loading hub for a third of its exports of crude and fuel oil.

For a graphic on PDVSA's facilities in the Caribbean, see:

"PDVSA has absolutely lost ground in the Caribbean," said Lisa Viscidi, director of Energy, Climate Change and Extractive Industries at the Inter-American Dialogue in Washington, noting falling oil sales in the region for the past two years.   Continued...

The logo of the Venezuelan state oil company PDVSA is seen at a gas station in Caracas, Venezuela on June 30, 2016. REUTERS/Carlos Garcia Rawlins/File Photo