Residual fuel tops off Venezuela’s tanks as exports remain almost paralyzed

The accumulation of residual fuel inventories at Venezuela's onshore tanks is forcing state company PDVSA to resort to extreme solutions to avoid the shutdown of refining units, as a U.S. blockade stopping sanctioned tankers going in and out the country keeps exports almost paralyzed, four sources said.

Because it mostly produces extra heavy crude that needs to be diluted for transportation and processed in complex refineries, Venezuela also produces high volumes of residual fuel, particularly high-sulfur fuel oil, which is typically exported to Asia.

But the U.S. blockade has reduced those shipments to a minimum in the last two weeks, according to company documents and shipping data.

After topping onshore tanks almost completely, PDVSA has been storing crude and fuel oil in tankers as part of a floating storage strategy. But with some 25 million barrels of residuals already in storage, the company is running out of capacity, one of the sources said.

PDVSA is now trying to reopen idled tanks and has begun sending residual fuel to oil waste pools in the country's western region, an extreme solution to avoid shutdowns of operational units at the country's 955,000-barrel-per-day Paraguana Refining Center, another source said.