MOSCOW (MRC) -- Venezuela has suspended new crude shipments to Europe under an oil-for-debt deal and has asked Italy's Eni and Spain's Repsol to provide it with fuel in exchange for future cargoes, three people familiar with the matter said, said Hydrocarbonprocessing.
Venezuela's oil company PDVSA no longer is interested in the oil-for-debt deals that the U.S. State Department authorized in May, the sources said, which allowed the state company to resume shipments to Europe after a two-year suspension caused by U.S. sanctions.
Washington authorized the shipments as long as cargo proceeds were used to pay off accumulated debt PDVSA owed to joint ventures with Eni and Repsol. "PDVSA wants to go back to oil swaps, and that is not possible yet," said a person involved in cargoes previously delivered to Europe. "There's zero interest in the oil-for-debt deals."
Venezuelan oil shipments, particularly those sent to refineries in Spain, have helped Europe reduce purchases of Russian oil since the invasion of Ukraine. But the deal's terms have not provided needed cash or fuel to PDVSA, whose own refineries are struggling to produce gasoline and diesel after years of underinvestment and lack of repairs.
PDVSA, Eni, Repsol and the U.S. State Department did not immediately reply to requests for comment. According to PDVSA's shipping schedules, there are no loading windows assigned to Eni or Repsol for Europe-bound cargoes in August, even though stocks of diluted crude oil (DCO) at the Jose port rose to almost 5 MM barrels as of Aug 8.
PDVSA wants to get fuel in exchange for its crude, while using a portion of the cargoes' value to offset billions of dollars in debts to joint venture partners including Chevron, Eni and Repsol, according to the sources. The deal reshuffle could help the Venezuelan company reanimate its Orinoco Belt extra heavy oil operations, which need imported diluents such as heavy naphtha, and ease the country's motor fuel deficit.
Since last year, PDVSA has relied mostly on Iranian diluents to turn its extra heavy crude into exportable grades. Since June, Eni received a total of 3.6 MM barrels of Venezuelan diluted crude oil (DCO), according to the PDVSA's documents and tanker tracking data. Most of that volume was later delivered by Eni to Repsol, which has a larger capacity for refining the South American country's heavy sour crude grades.
As per MRC, Eni believes it will be able to completely replace Russian gas imports by 2025 as uncertainty over Moscow's energy supplies to Europe forces countries to seek alternative sources. After signing new gas supply agreements with Algeria, Egypt and Congo earlier this year, Eni sees additional opportunities arising in other countries including Libya, Angola, Mozambique, and Indonesia, as well as in its home country.