A Venezuelan Tanker Is Stranded Off The Louisiana Coast

Tyler Durden's picture

A tanker loaded with 1 million barrels of Venezuelan heavy crude has been stranded for over a month off the coast of Louisiana, not because it can't sail but as a result of Venezuela's imploding economy, and its inability to obtain a bank letter of credit to deliver its expensive cargo. It's the latest sign of the financial troubles plaguing state-run oil company PDVSA in the aftermath of the latest US sanctions against the Maduro regime, and evidence that banks are slashing exposure to Venezuela across the board as the Latin American nation spirals into chaos.

As Reuters reports, following the recently imposed US sanctions, a large number of banks have closed accounts linked to officials of the OPEC member and have refused to provide correspondent bank services or trade in government bonds. The stranded tanker is one direct casualty of this escalation.

The tanker Karvounis, a Suezmax carrying Venezuelan diluted crude oil, has been anchored at South West Pass off the coast of Louisiana for about a month, according to Marinetraffic data.

 

For the past 30 days, PBF Energy, the intended recipient of the cargo, has been trying unsuccessfully to find a bank willing to provide a letter of credit to discharge the oil, according to two trading and shipping sources.

The tanker was loaded with oil in late June at the Caribbean island of St. Eustatius where PDVSA rents storage tanks, and has been waiting for authorization to discharge since early July, according to Reuters. It is here that the delivery process was halted as crude sellers request letters of credit from customers that guarantee payment within 30 days after a cargo is delivered.

While the documents must be issued by a bank and received before the parties agree to discharge, this time this is impossible as the correspondent bank has decided to avoid interacting with PDVSA and running afoul of the latest US sanctions. It was not immediately clear which banks have denied letters of credit and if other U.S. refiners are affected.

In an ironic coincidence, these days the state energy company of Venezuela, PDVSA, is almost as much Venezuelan as it is Russian and Chinese. Chinese and Russian entities currently take about 40% of all PDVSA's exports as repayment for over $60 billion in loans to Venezuela and the company in the last decade, as we reported last year and as Reuters recently updated. This has left U.S. refiners among the few remaining cash buyers. Meanwhile, as a result of these ongoing historical barter deals exchanging oil for refined products and loans, PDVSA's cash flow has collapsed even as the company's creditors resort to increasingly more aggressive measures to collect: just this April, a Russian state company took a Venezuelan oil tanker hostage in hopes of recouping $30 million in unpaid debt.

The first indication that the financial noose is tightening on the Caracas regime came earlier this month when Credit Suisse barred operations involving certain Venezuelan bonds and is now requiring that business with President Nicolas Maduro's government and related entities undergo a reputation risk review. In a while publicized move, this past May Goldman Sachs purchased $2.8 billion of Venezuelan debt bonds at steep discount, a move criticized by the Venezuelan opposition and other banks.

While PDVSA owns the cargo, the actual tanker was chartered by Trafigura:

Since last year, the trading firm has been marketing an increasing volume of Venezuelan oil received from companies such as Russia's Rosneft, which lift and then resell PDVSA's barrels to monetize credits extended to Venezuela, according to traders and PDVSA's internal documents.

 

Some barrels are offered on the open market, others are supplied to typical PDVSA's customers including U.S refiners.

Meanwhile, even before this latest sanctions-induced L/C crisis, Venezuela's oil exports to the US were already in freefall: PDVSA and its JVs exported only 638,325bpd to the US in July, more than a fifth, or 22% less, than the same month of 2016, according to Reuters Trade Flows data.

As for the recipient, PBF received just three cargoes for a total of 1.58 million barrels last month, the lowest figure since February. Other U.S. refineries such as Phillips 66 did not receive any cargo. The US refiner and PDVSA have a long-term supply agreement for Venezuelan oil signed in 2015 when PBF bought the 189,000-bpd Chalmette refinery from PDVSA and ExxonMobil Corp.

Earlier in the month, PBF's Chalmette refinery received half a million barrels of Venezuelan crude on the tanker Ridgebury Sally B. This second delivery got stuck on tanker Karvounis.

It is likely that soon virtually all Venezuelan cargos bound for the US will share a similar "stranded" fate as one bank after another cease providing L/C backstops to the Venezuelan company, ultimately suffocating Maduro's regime which is in dire need of dollars to keep the army on its side and prevent a revolution. As for how high the price of oil rises as Venezuela's oil production is slowly taken offline, it remains to be seen. Three weeks ago, Barclays calculated that a "sharper and longer disruption" to Venezuela oil production could raise oil prices by at least $5-7/barrell. Such a disruption appears to now be forming.

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nmewn's picture

Hey, dats I nice tanker youz got deh, be a real shame if sumpin was to happen to it...know what I mean?

SoilMyselfRotten's picture

I just put on my new John McCain/Lyndsey Graham ears and now it sure looks like Venezuela attacked Louisiana. 

BuddyEffed's picture

More likely to trigger and deepen the crisis if you ask me.

moimeme's picture

Watch the USG seize it, the way they seized Russia's stuff... and Iran's... and Cuba's...

Wait a minute, I notice a pattern.

Honey-Badger's picture

Fucking bankers getting in the way of free trade as usual.

stacking12321's picture

as much as bankers in general are scum, it's really the federal government that's to blame here - the bank reasonably acted to protect its interests from arbitrary theft by the federal government under guise of "sancions".

 

Benjamin123's picture

Free trade with pirates.

PDVSA=Pirates.

Shropshire Lad's picture

The tanker is stranded because of the USG ongoing aggression against a country which refuses to become a vassal.  It is now a major USG policy to destroy any society which shows any sign of independence from their tyranny.

francis scott falseflag's picture

It'd be a real shame if if dis tanker started leaking its cargo of diluted crude all over da Louisiana coast all of a sudden,

if youz know what I mean? 

PrezTrump's picture

Obamas spotted in the ocean.  

francis scott falseflag's picture

I always thought the buyer had to provide the letter of credit to receive the merchandise, not the seller.

Everything is so topsy turvy, I'm not even going to check your source.

user_name's picture

Correct, the buyer's bank won't provide the letter of credit because of sanctions.

francis scott falseflag's picture

 

"a result of Venezuela's imploding economy, and (((its))) inability to obtain a bank letter of credit"

                                      SYNTAX DONE ME IN

BabaLooey's picture

Flood Tubes One and Two and open the outer doors..........

"Aye Captain..........."

Grandad Grumps's picture

A bank is holding up delivery. So, now it is clear who is behind the crisis in Venezuela.

boattrash's picture

Yep, proof that "cash is king" if you really want to get something done.

LindseyNarratesWordress's picture

As usual, Mr. Grumps, you are precisely correct, but my comment, below yours, expounds significantly upon your post.

 

Also, AS USUAL, (((they))) are behind the destruction of Venezuela's economy, but you already knew that, along with "almost" everyone else, here, I AM SURE.

 

Lindsey

francis scott falseflag's picture

We don't need any expounding here at ZH.  So put it back in your pants and zip up.

TheEndIsNear's picture

(((((((((((((((((who))))))))))))))))(((((((((((((((((are)))))))))))))))))((((((((((((((((they?))))))))))))

radio man's picture

I played that rim-shot out in my head. Tanks alot!

flyingcaveman's picture

Maybe Venezuela is demanding gold for oil.  Of course banks don't have any gold but the one thing, the only thing, that banks DO have is credit.  What's the problem?  It's fucking oil, something everybody uses.  And that's why VeneZuela was declared a threat to our national security.  That's the only thing that can explain this.

Benjamin123's picture

Why would they want any gold? They need neither gold nor money, but everything you can buy with them. They might as well refill that tanker with cooking oil as payment and have it sail back to Puerto Cabello.

Gold is a storage of value, you only store a surplus and it means nothing when living hand to mouth.

The whole argument about pricing merchandise in dollars or gold is stupid for every producer without a surplus. It is only relevant for countries with large surpluses, like China, Norway, Qatar, Germany and Saudi Arabia, that have to sit on a mountain of wealth and think about how to store it in the long term.

LindseyNarratesWordress's picture

For-the-record, what is happening to and in Venezuela is a literal war-of-economics, in-stead of a "hot-war", but is DEVASTATING, regardless, to the people, which should be unacceptable to all of you whom are intellectually-honest.

 

http://www.democracynow.org/2004/11/9/confessions_of_an_economic_hit_man

 

..."John Perkins describes himself as a former economic hit man–a highly paid professional who cheated countries around the globe out of trillions of dollars.

 

20 years ago Perkins began writing a book with the working title, "Conscience of an Economic Hit Men."

 

Perkins writes, "The book was to be dedicated to the presidents of two countries, men who had been his clients whom I respected and thought of as kindred spirits–Jaime Roldós, president of Ecuador, and Omar Torrijos, president of Panama. Both had just died in fiery crashes. Their deaths were not accidental. They were assassinated because they opposed that fraternity of corporate, government, and banking heads whose goal is global empire. We Economic Hit Men failed to bring Roldós and Torrijos around, and the other type of hit men, the CIA-sanctioned jackals who were always right behind us, stepped in.

 

John Perkins goes on to write: "I was persuaded to stop writing that book. I started it four more times during the next twenty years. On each occasion, my decision to begin again was influenced by current world events: the U.S. invasion of Panama in 1980, the first Gulf War, Somalia, and the rise of Osama bin Laden. However, threats or bribes always convinced me to stop."...

 

FACTS ARE FACTS, people, and while I do not, necessarily, like the government of Venezuela, I, ALSO, abhor the INTENTIONAL SABOTAGE, AND DESTRUCTION, OF MYRIAD-OF-PEOPLE-AND-THINGS WITHIN THE NATION, BY (((the malefactors))), whom have taken-over our nations of "The West".

 

Lindsey

    

vato poco's picture

oh, sell your bullshit to someone who's buying it, excessively dramatic signature boy.

it's not the Jooooz or the Banksters or the EEEEEbil Rothschilds or them awful awful economic hitmen (LOL) that have ruined & bankrupted a country with more proven oil reserves than Saudi Arabia, fuckwit. yeah, they may have contributed a little to the overall fuckeduppedness, but since all Venezuela has to do to make $ is pump & drill more at some of the world's lowest production costs - and yet somehow, they cannot - maybe, just MAYBE the problem lies elsewhere. 

like in the fact that socialist/commie gangsters control and are and have been sytematically looting the country for the last 20 years. might THAT be it, ya think?

LindseyNarratesWordress's picture

I am absolutely appalled at the willful-ignorance, even HERE, at Mr. Durden's site, of the TRUTH AS IT IS.

 

Do you people, honestly believing this BULLSHIT, have any shame, at all, as human-beings?

 

Honestly...DO YOU?

 

The (((mother-fuckers))) whom HERO Chavez through-the-fuck-out-of his nation were the oligarchs COMPLETELY RAPING AND PILLAGING ANYTHING AND EVERYTHING ON WHICH (((they))) COULD GET THEIR HANDS!!!!!!!!!!!!!!!!  What is happening, and has been done to, Venezuela is VENGEANCE for Hero Chavez saving his nation from ending-up like EVERY OTHER FUCKING SHIT-HOLD IN SOUTH AMERICA; however, sadly, due to sanctions, literal CIA operatives fomenting a revolution and street-violence, etc., the catastrophe that Hero Chavez tried to end, once-and-for-all, was simply DELAYED.

 

If you people can not understand FACTS AS THEY ARE, and are EASILY-PROVEN, then you mother-fuckers are, honestly-to-Christ, as bad as (((the mother-fuckers))) destroying the entirety of our planet, and you better fucking believe that I mean every single word that I say, and write.

 

Lindsey

Haitian Snackout's picture

Listen pumpkin.... Chavez was one of them. Glad you liked the play though.

vato poco's picture

huh. well, lindsey ol chap, along with your drooling-idiot-weak-ass-blame-the-weather-on-the-joooooz "argument", it's clear you need to be a bit *more* breathless. strident. hysterical like a teenage girl.

try using more CAPS. cram in even more (parentheses!!!) and EXCLAMATION POINTS!!!!!!!  see if that'll help, you raving lunatic dumbshit

 

(magnificent 100-trumpet fanfare) Vato

EmeraldWI's picture

If it makes Koch fracked oil more valuable, one could assume they have a political dirty hand in it.

 

Cluster_Frak's picture

i bet glencore and guvnor are racing their helicopters to buy it for cash, pennies on the dollar.

boattrash's picture

Shit, we don't have to steal it. After sitting an extra month, the crew would likely trade it to you for a few bags of rice and beans.

are we there yet's picture

Cargo shipping risk insurance goes up as well. Maduro has been putting nothing back into oil exploration or oil field maintenance. All trending metrics are bad for Venezuela.

Slippery Slope's picture

Oddly, these sanctions will mainly affect the energy supplies to the U.S.

Benjamin123's picture

Cringe. I hate that word, energy, used in lieu of oil.

"Energy provider" "Energy industry". Bah.

wisehiney's picture

And here I was, thinking that the crew was too hungry to row.

steve2241's picture

Why is a Letter of Credit needed???  Why don't they just pay cash?  It's faster.

BidnessMan's picture

Not enough wheelbarrows for the piles of Bolivars needed.

BidnessMan's picture

Used to be the richest country in South America. Hope Bernie Sanders is paying attention.

makinbacon's picture

We will squeeze your nuts until Wells Fargo is your banker and the US dollar is your God.

Then you can buy toilet paper....

armageddon addahere's picture

Why would they need toilet paper when they have nothing to eat?

Dun_Dulind's picture

Take it.  Maduro can take a flying fucking leap.

Juliette's picture

This is just stupid. I will take the tanker and its oil payload any day, no questions asked and no letters of shit required.

 

Another question; Why is Venezuela trying to sell that oil to the USA while it is clear that the USA doesnt want it? There are dozens of other countries in the world who would happily buy it.

 

Oh, and why doesnt the buyer just pay in cash? Like wiring it over to Venezuela or using Bitcoin or gold or whatever ... lack of creativity, anyone? Why a "Latter of Credit"? If you want to pay in 30 days anyway, you can pay now as well.

Yen Cross's picture

  Contango much?

fishmonger's picture

I don't even know what Contango means, but I enjoyed saying it out loud.

flyingcaveman's picture

Some kind of south american dance where everybody is jumping around bumping into each other with their heads up their asses.