Venezuela forced to import 13 million barrels of oil this year

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A man pushes his car after running out of gas at a gas station of Venezuelan state oil company PDVSA in Maturin, Venezuela March 23, 2017. REUTERS/Marco Bello

Venezuela, home to the largest oil reserves in the world, is seeking to import 13 million barrels of fuel this year as the country’s refineries are now operating at less than half of their capacity.

Output has dropped at the crisis-hit OPEC country’s refineries in recent months, with critics blaming shortages of spare parts, lack of maintenance, and a shaky electrical grid.

Falling output at refineries means that Venezuela needs to import more gasoline, squeezing the national budget even further.

State-run oil company Petroleos de Venezuela SA is inviting trading houses and refineries to supply as much as 70,869 barrels of oil products daily from July through the end of the year, according to tender documents obtained by Bloomberg. The company is seeking gasoline, gasoline octane-enhancers, diesel, and also intermediary feedstocks such as vacuum gas oil and catalytic naphtha, which refineries use for fuel production. PDVSA is also seeking heavy naphtha, a diluent used mixed with its heavy oil so crude can flow more easily through pipelines and be sold or refine

The purchases account for about a third of the country’s oil products needs, estimated at 200,000 barrels a day, says Alejandro Grisanti, director of the Caracas-based consultancy Ecoanalitica.

“This volume should supply just part of the country’s needs this year,” he said. “PDVSA will certainly come back for more.”

Venezuela, immediate neighbor of soon-to-be oil producing country Guyana, is a stark example of what gross mismanagement and political strife can do, even to a country rich in oil resources. Cognizant of these perils, Guyana is in a race against time to put in place vital legislation, strong institutions and a prepared population, as oil production is set to begin in 2020.