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PDVSA moves to protect exports as Conoco seizures weigh - sources

Reuters 

By Marianna Parraga

(Reuters) - Venezuela's has halted crude deliveries to a refinery ahead of a planned shutdown and changed some trade terms as it moves to protect its exports from seizures in a bruising legal dispute with U.S.-based ConocoPhillips, sources with knowledge of the moves said on Friday.

last week began legal actions in the to enforce a $2 billion arbitration award by the (ICC) over the 2007 nationalisation of its projects in The moves have disrupted fuel deliveries throughout the Caribbean, much of which is dependent on supplies.

plans to let its 335,000 barrel-per-day leased refinery in Curacao halt operations once crude inventories are exhausted because no new shipments are headed to the Caribbean, the sources said.

The refinery, which was getting ready to restart several units this month after a lengthy maintenance project, will retain fuel produced. PDVSA transferred custody over the inventories to the facility, owned by the Curacao government, the sources said.

Separately, ownership of crude to be refined at Isla in Curacao was transferred by PDVSA to its U.S. unit, Citgo Petroleum, in an attempt to avoid potential seizures by Conoco, one of the sources added.

"The seizure in Curacao was enforced on Thursday, so the inventories' custody was transferred. The refinery will eventually stop (operations)," the source said.

Conoco's actions continue to force PDVSA, which was already struggling to export its amid falling output and a lack of maintenance, to change its trade arrangements to avoid further seizures of physical assets, tankers or the barrels aboard.

The company is now selling all its for export under FOB (free on board) terms, meaning the barrels have to be delivered to buyers in Venezuelan waters.

said on Friday that it had been in touch with local officials "to address issues that may arise as a result of enforcement actions."

PDVSA did not reply to a request for comment.

Curacao fuel distributor, Curoil, told on Friday the company has "diversified" its fuel supply, so it does not foresee any issues at the moment. The island's earlier this week said Curacao would import fuel if the refinery is paralyzed.

In Bonaire, another of the islands affected by Conoco's actions, there is enough fuel to continue generating for at least two weeks, said Caspar Itz, a for the

PDVSA last year shipped from the terminals it owns and rents in Curacao, and St. Eustatius 24 percent of its total exports, or about 400,000 barrels per day (bpd). Facilities in Curacao are crucial for loading big vessels bound for and India, while most of its are sent from

For May, PDVSA had planned to ship from Curacao 1.45 million barrels (47,000 bpd) of fuels to Haiti, Cuba, El Salvador, Nicaragua, and other smaller islands, according to the state-run firm's internal trade documents.

PDVSA also planned to deliver this month over 2.3 million barrels of crude and to Citgo and Russia's from Curacao and Bonaire, the documents showed.

PDVSA is also looking for a place in Venezuelan waters to start transferring oil from small to larger tankers, which is typically done for large cargoes bound for Asian destinations.

In its first official comments since Conoco's actions started, on Thursday suggested it was ready to pay the U.S. oil company. said it was looking forward to PDVSA's proposals but added that absent any agreement or payment it would continue its enforcement actions.

(Reporting by Marianna Parraga; additional reporting by Editing by and Tom Brown)

(This story has not been edited by Business Standard staff and is auto-generated from a syndicated feed.)

First Published: Fri, May 11 2018. 22:59 IST
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