Oil and Gas

Venezuela crude stocks drop as exports pick up despite sanctions

Jan 26 (Reuters) - Venezuelan state oil company PDVSA’s inventories of its main export crude grade dipped this week to their lowest levels since late November, internal company documents seen by Reuters showed.

Merey 16 stocks at the country’s main oil terminal, the Jose port, fell to 4.85 million barrels as of Jan. 25, down from 9 million barrels on Dec. 21. The drop came as exports by Petroleos de Venezuela (PDVSA) and its joint ventures rise despite U.S. sanctions on the company, as little-known firms have replaced traditional buyers.

High inventories at Jose have consistently been a constraint on PDVSA’s crude output since the sanctions were imposed in January 2019, often forcing the company to shut blending and upgrading activities at plants near the terminal as well as crude extraction further upstream.

The decline in stocks this month has allowed PDVSA to boost oil blending and upgrading - necessary to convert extra-heavy crude from the Orinoco belt into exportable grades - to 247,000 barrels per day (bpd) on Jan. 25 and 276,000 bpd on Jan. 21, the documents showed.

Those were the highest levels since October, with both the Petrosinovensa blending facility, part of a joint venture with China National Petroleum Corp, and the Petropiar upgrader, part of a joint venture with Chevron Corp operating normally.

PDVSA did not reply to a request for comment.

The cash-strapped company increased crude output in the Orinoco belt, one of the world’s largest oilfields by crude reserves, to 286,000 barrels on Jan. 21, up from 219,000 bpd in early September, separate documents showed.

Still, PDVSA - which had seen crude output collapse well before sanctions after years of underinvestment - has struggled to sustain its operations this month. Over the weekend, it halted output at the 310,00-bpd Cardon refinery, and contained a gas leak near Jose. (Reporting by Marianna Parraga in Mexico City Additional reporting and writing by Luc Cohen in New York Editing by Sonya Hepinstall)