Pricing fuel in dollars is 'lifeline' for Venezuela's PDVSA, board member says


By Deisy Buitrago

CARACAS, Feb 4 (Reuters) - Venezuela's move last year to raise some gasoline prices and accept payment in dollars has been a "lifeline" for cash-strapped state oil company Petroleos de Venezuela PDVSA.UL, a board member said in an interview this week.

Wills Rangel, president of the FUTPV oil workers' union and an external director at PDVSA, said the company had seen its crude exports and cash flow collapse in the wake of U.S. sanctions on the company, part of Washington's effort to oust President Nicolas Maduro, whom Rangel supports.

Following months of acute gasoline scarcity in early 2020 as a result of years of underinvestment and mismanagement at PDVSA's 1.3 million barrel-per-day (bpd) refining network, as well as the sanctions, Maduro allowed some 200 service stations to sell gasoline at the equivalent of 50 U.S. cents a liter.

Venezuela, an OPEC member with the world's largest crude reserves by some measures, had for years subsidized gasoline so heavily that it was essentially free at the pump.

"It has been brutal," Rangel said in a Thursday interview in PDVSA's Caracas headquarters, referring to the impact of the sanctions. "What has allowed us to breathe a little bit has been the strategy we did with the 200 stations ... That has helped us. It has been a lifeline."

Rangel said PDVSA was currently producing around 60,000 bpd of gasoline, around half of national demand. He did not specify how much income the company had received from gasoline sales.

He said the company was producing around 50,000 bpd of diesel, and had no inventories of the fuel. Some PDVSA trade partners are pushing the U.S. government to lift a ban on crude-for-diesel swaps with Venezuela, citing the humanitarian applications of the fuel.

Rangel estimated Venezuela's current crude output around 500,000 bpd, below the 1.2 million bpd it produced in January 2019, when the sanctions were implemented, and well below the 2.4 million bpd it produced when Maduro took power in 2013. PRODN-VE

To increase production, Rangel said, Oil Minister Tareck El Aissami and PDVSA President Asdrubal Chavez had met with private companies about investing in Venezuela's oil industry in the context of an "anti-blockade" law passed last year, in part to give the private sector a greater role in the energy sector after years of increased state involvement.

"With this constitutional law, the president is seeking to be true to the times," Rangel said, noting that oil prices were now lower and the "geopolitical circumstances" were different from when the late former President Hugo Chavez increased the state presence in the oil industry in the mid-2000s.

(Reporting by Deisy Buitrago in Caracas Writing by Luc Cohen; Editing by Steve Orlofsky)

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


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