Venezuela increases fuel exports to allies despite supply crisis

The lack of gasoline in OPEC member Venezuela has been exacerbated by an increase in government-approved fuel exports to foreign allies and the displacement of important staff from the company, sources with the state energy company PDSA said.

Venezuela sells gasoline to its citizens at the lowest price in the world. Fuel supplies continued to flow despite the local oil sector being exposed to instability and the deepening economic crisis under the administration of President Nicolas Maduro, which has made the country suffer from a shortage of supplies of many commodities.

But that changed on Wednesday when Venezuelan citizens faced the first fuel shortage nationwide since one of the world’s biggest refiners was hit by an explosion five years ago. President Hugo Chavez’s government at the time trimmed exports to ensure enough fuel was available in the country.

This week’s shortage mainly resulted from problems between technical failures and maintenance that led to a half-cut in fuel production.

Contrary to five years ago, Caracas continued to export fuel to political allies and even increased shipments last month despite warnings within the government-run company that this could cause a crisis in domestic supplies.

The internal documents showed that there was a need to divert the shipments originally from the refineries to the domestic market in order to meet export obligations.

“If these extra quantities … were exported, they would affect the planned shipments to the local market,” an e-mail from an official in the company’s local marketing department told an international trade unit.

Last month, Venezuela exported 88,000 barrels per day (bpd) of fuel, equivalent to a fifth of its domestic consumption, to Cuba, Nicaragua and other countries, according to the internal documents of BDSA seen by Reuters.

The quantities are 22,000 barrels per day higher than the quantities Venezuela has been shipping to these countries under Chávez’s agreements to expand his diplomatic leverage by cutting fuel costs to them through cheap supplies of crude and fuel.

Excess exports were ordered from senior executives at the company, according to internal e-mails seen by Reuters.

Venezuela’s oil ministry and PDVSA, officially known as Petroleos de Venezuela, have not responded to requests for comment.

The crisis in the country’s fuel system has been exacerbated by the departure of staff working in the company’s trade and supply unit, three sources close to the company said