Venezuela Is So Broke It Can’t Even Export Oil
Oil tankers flush with crude wallow adrift in the Caribbean, as cash-strapped PdVSA can’t pay the bills.
A fleet of rundown Venezuelan oil tankers carrying some 4 million barrels of oil and other fuels is wallowing in the Caribbean Sea. Not because of bad weather, or mechanical problems, but because Venezuela’s state-owned oil company, Petróleos de Venezuela SA, doesn’t have the cash to get them to their final destinations.
Beyond the obvious environmental risks, it’s doubly bad news for Venezuela, a country in dire economic straits and full-fledged crisis, with a political impasse, looting, dangerous food and health supply shortages, and massive protests. Venezuela is massively reliant on oil exports to bankroll government services. But the cash-strapped country can’t even find the money to service the vessels that carry its exports. And Venezuela needs the exports to get the cash to service the vessels. It’s a vicious circle.
Before ships can venture into international waters, international maritime law requires safety inspections, hull cleanings, and other services. PdVSA, already mired in debt, can’t foot those bills, leaving crude-stained tankers in the lurch. Further exacerbating the problem is intermittent leaks at Venezuela’s poorly-maintained oil export terminals. The leaks stained incoming and outgoing tankers, creating a backlog of cleaning. Some tankers wait as long as two months for cleaning before being seaworthy, one inspector told Reuters, which first reported the story.
Venezuela, once Latin America’s most powerful petrostate, is on the brink of collapse after decades of economic mismanagement and boiling tensions between President Nicolas Maduro and opposition parties. Low global oil prices haven’t helped.
The global oil cartel OPEC agreed to slash global production late last year, but the small uptick in oil prices likely won’t provide enough reprieve for PDVSA to weather its debt storm; it projects its oil production will linger near a 23 year-low in 2017.
So while Venezuela’s political crisis continues unabated, its sole possible economic lifeline drifts at sea, in aging, dirty tankers.
Photo credit: Galen Rowell/Corbis via Getty Images