Exclusive: Venezuela increased fuel exports to allies even as supply crunch loomed

Venezuelan motorists line up for fuel at a gas station of Venezuelan state oil company PDVSA in Maturin, Venezuela March 23, 2017. REUTERS/Marco Bello

By Marianna Parraga and Alexandra Ulmer

HOUSTON/CARACAS (Reuters) – A gasoline shortage in OPEC member Venezuela was exacerbated by an increase in government-sanctioned fuel exports to foreign allies and an exodus of crucial personnel from state-run energy company PDVSA, according to internal PDVSA documents and sources familiar with its operations.

Leftist-run Venezuela sells its citizens the world’s cheapest gasoline. Fuel supplies have continued flowing despite a domestic oil industry in turmoil and a deepening economic crisis under President Nicolas Maduro that has left the South American country with scant supplies of many basic necessities.

That changed on Wednesday, when Venezuelans faced their first nationwide shortage of motor fuel since an explosion ripped through one of the world’s largest refineries five years ago. At the time, the government of then-President Hugo Chavez curbed exports to guarantee there was enough fuel at home.

This week’s shortage was also mainly due to problems at refineries, as a mix of plant glitches and maintenance cut fuel production in half.

Unlike five years ago, Caracas has continued exporting fuel to political allies and even raised the volume of shipments last month despite warnings within the government-run company that doing so could trigger a domestic supply crunch.

Shipments from refineries to the domestic market needed to be redirected to meet those export commitments, the internal documents showed.

“Should this additional volume … be exported, it would impact a cargo scheduled for the local market,” read one email sent from an official in the company’s domestic marketing department to its international trade unit.

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

That was up 22,000 bpd on the volumes Venezuela had been shipping to those two countries under accords struck by Chavez to expand his diplomatic clout by lowering their fuel costs through cheap supplies of crude and fuel.

The order to increase exports came from PDVSA’s top executives, according to the internal emails seen by Reuters.

Venezuela’s oil ministry and state-run PDVSA, formally known as Petroleos de Venezuela SA, did not reply to requests for comment for this story.

FUEL STRAIN, BRAIN DRAIN

The strain on the country’s fuel system has been worsened by the departure of staff in PDVSA’s trade and supply unit who are key to ensuring fuel gets to where it’s needed and making payments for imports, three sources close to the company said.

The unit has seen around a dozen key staffers depart since Maduro shook up PDVSA’s top management in January. Among those who left was the head of budget and payments, two sources said.

“Every week someone leaves for one reason or another,” said a PDVSA source familiar with the unit’s operations.

Some have been fired, while others have left since the shake-up inserted political and military officials into top positions and bolstered Maduro’s grip on the company that powers the nation’s economy.

The imposition of leaders with little or no experience in the industry has further disillusioned some of the company’s experienced professionals and accelerated an exodus that had already taken hold as economic and social conditions in Venezuela worsened.

A recent internal PDVSA report seen by Reuters mentioned “a low capacity to retain key personnel,” amid salaries of a few dozen dollars a month at the black market rate.

UNPAID BILLS

The departure of staff responsible for paying suppliers, as well as a cash crunch in the company and the country, have led to an accumulation of unpaid bills for fuel imports into Venezuela.

Had those bills been paid, the supply crunch would have been less acute, the company sources said.

About 10 tankers are waiting near PDVSA ports in Venezuela and the Caribbean to discharge fuel for domestic consumption and for oil blending.

Only one vessel bringing fuel imports has been discharged since the beginning of the week, shipping data showed.

PDVSA ordered some of the cargoes as it prepared alternative supplies while refineries undergo maintenance.

The tankers sitting offshore will not unload until PDVSA pays for their cargoes, said shippers and the company sources.

Should PDVSA pay – up to $20 million per cargo – shortages could blow over relatively soon.

The cash-strapped company has struggled since the global oil price crash that began in 2014 cut revenue for its crude exports. PDVSA is tight on cash as it prepares for some $2.5 billion in bond payments due next month.

While the vessels sit offshore, lines of dozens of cars waited at gas stations in central Venezuela on Wednesday and Thursday. The shortages angered Venezuelans who already face long lines for scarce food and drugs.

PDVSA blamed the supply crunch on unspecified problems for shipping fuel from domestic refineries to distribution centers. The company said it was working hard to solve the gasoline situation by boosting deliveries to the worst-hit regions.

A shortage of trucks to move refined products has also caused bottlenecks, oil workers told PDVSA President Eulogio Del Pino during a visit to a fuel facility this week, asking for help. Trucks are in short supply because the country does not have enough funds to pay for imports of spare parts.

It was unclear when fuel supplies would return to normal, although by late Thursday PDVSA appeared to have distributed some fuel from storage to Caracas and the eastern city of Puerto Ordaz. Lines to fill up at gasoline stations shortened in both cities, according to Reuters witnesses.

Workers at the 335,000-barrel-per-day Isla refinery on the nearby island of Curacao operated by PDVSA said on Friday that the refinery had begun restarting its catalytic cracking unit, which could boost fuel supplies in the coming days.

(Additional reporting by Mircely Guanipa in Punto Fijo and Maria Ramirez in Puerto Ordaz; Editing by Simon Webb and Jonathan Oatis)

Scientists find deadly scrub typhus bacteria in South America

Picture of a Chigger, known carrier of Scrub typhus in Southeast Asia.

By Kate Kelland

LONDON (Reuters) – Scrub typhus, a deadly disease common in southeast Asia and spread by microscopic biting mites known as chiggers, has now taken hold in a part of South America and may have become endemic there, scientists said on Wednesday.

The tropical disease, which kills at least 140,000 people a year in the Asia-Pacific region, has been confirmed in a cluster of cases on a large island off Chile, some 12,000 kilometres from its usual haunts on the other side of the Pacific.

Scrub typhus has been known of for years and the bacteria that causes it was first identified in Japan in 1930.

It is caused by the bacteria, Orientia tsutsugamushi, transmitted by chiggers, and spreads through the lymphatic fluid. Those infected find the illness can begin quite suddenly, with shaking chills, fever, severe headache, infection of the mucous membrane in the eyes, and lymph node swelling.

Until 2006, scrub typhus was thought to be limited to an area called the “tsutsugamushi triangle”, from Pakistan in the west to far eastern Russia in the east to northern Australia in the south.

But writing in the New England Journal of Medicine, researchers from Britain’s Oxford University and the Pontificia Universidad Católica and Universidad del Desarrollo in Chile the cases found off of Chile’s mainland “suggest there may be a much wider global distribution than previously understood.”

In 2006, two cases of scrub typhus were found outside the triangle. One, in the Middle East, was caused by a previously unrecorded bacteria related to tsutsugamushi and named Orientia Chuto. The second was found on Chiloé island, just off mainland Chile.

In January 2015 and again in early 2016, three more cases were discovered in Ancud, on the northern coast of Chiloé.

“Scrub typhus is a common disease but a neglected one,” said Paul Newton, director of the Lao–Oxford–Mahosot Hospital Wellcome Trust Research Unit, which collaborated in the study.

“Given that it is known to cause approximately a million clinical cases, and kills at least 140,000 people each year, this evidence of an even bigger burden of disease in another part of the world highlights the need for more research and attention to it.”

(Reporting by Kate Kelland; Editing by Toby Chopra)

Colombia to agree bilateral ceasefire with rebels this week: president

Colombia President

BOGOTA (Reuters) – Colombia will reach agreement on a bilateral ceasefire at peace talks with leftist FARC rebels this week, President Juan Manuel Santos said on Tuesday, in what he said would mark a key advance in the negotiations to end 50 years of war.

Santos said this week the government and the Revolutionary Armed Forces of Colombia (FARC) rebels will complete the more than three-year-old negotiations by July 20.

“If the negotiators make a final effort to finish the definitive point that is a ceasefire and the end to hostilities, we will have taken a fundamental step in attaining peace,” Santos said in a speech at an education event in Bogota.

“I appeal to God that he gives us the strength to finish these accords this very week, because we have almost completed them.”

Government sources said the agreement would likely not mean the ceasefire would begin right away, but rather that the announcement would lay out the details of a ceasefire set to begin when a final peace deal is signed.

A ceasefire accord will likely include details on how the rebels will demobilize, the sources said, and FARC leader Rodrigo Londono, better known by his nom de guerre Timochenko, may sign the accord with Santos on Thursday or Friday.

The two sides have reached agreements on more than half a dozen topics but have yet to agree terms for the ceasefire or on how exactly a referendum for Colombians to approve the peace deal will be organized.

The FARC called a unilateral ceasefire nearly a year ago and the government responded by halting air strikes on rebel camps.

Negotiators missed a self-imposed deadline for signing a deal in March, and Santos has come under fire over the past week for comments about the referendum he has promised will take place to approve a deal.

Timochenko took to Twitter earlier on Tuesday to say he was against announcing a date by which the talks would finish.

“Practice has demonstrated that setting dates hurts the process, even more when there isn’t an accord,” the rebel leader tweeted. “Although we are advancing, we aren’t there yet.”

Latin America’s longest war has killed some 220,000 people and displaced millions of others since 1964. Tens of thousands have gone missing.

(Reporting by Julia Symmes Cobb, additional reporting by Monica Garcia; Editing by Marguerita Choy)

South America Flooding Kills 6

The Pacific coast of South America is experiencing massive flooding after torrential rain deluged the region. At least six people are confirmed dead in Peru.

Arequipa in the southern part of the country has thousands left without electricity and clean drinking water due to the massive flooding. Peruvian authorities have declared a state of emergency for Arquipa and the surrounding regions. The country’s national meteorological service told the Andina news agency that the total rainfall in seven hours matched the average rainfall for three months. Continue reading