Exclusive: Venezuela increased fuel exports to allies even as supply crunch loomed

Venezuelan motorists line up for fuel at a gas station of Venezuelan state oil company PDVSA in Maturin, Venezuela March 23, 2017. REUTERS/Marco Bello

By Marianna Parraga and Alexandra Ulmer

HOUSTON/CARACAS (Reuters) – A gasoline shortage in OPEC member Venezuela was exacerbated by an increase in government-sanctioned fuel exports to foreign allies and an exodus of crucial personnel from state-run energy company PDVSA, according to internal PDVSA documents and sources familiar with its operations.

Leftist-run Venezuela sells its citizens the world’s cheapest gasoline. Fuel supplies have continued flowing despite a domestic oil industry in turmoil and a deepening economic crisis under President Nicolas Maduro that has left the South American country with scant supplies of many basic necessities.

That changed on Wednesday, when Venezuelans faced their first nationwide shortage of motor fuel since an explosion ripped through one of the world’s largest refineries five years ago. At the time, the government of then-President Hugo Chavez curbed exports to guarantee there was enough fuel at home.

This week’s shortage was also mainly due to problems at refineries, as a mix of plant glitches and maintenance cut fuel production in half.

Unlike five years ago, Caracas has continued exporting fuel to political allies and even raised the volume of shipments last month despite warnings within the government-run company that doing so could trigger a domestic supply crunch.

Shipments from refineries to the domestic market needed to be redirected to meet those export commitments, the internal documents showed.

“Should this additional volume … be exported, it would impact a cargo scheduled for the local market,” read one email sent from an official in the company’s domestic marketing department to its international trade unit.

Venezuela last month exported 88,000 barrels per day (bpd) of fuels – equivalent to a fifth of its domestic consumption – to Cuba, Nicaragua and other countries, according to internal PDVSA documents seen by Reuters.

That was up 22,000 bpd on the volumes Venezuela had been shipping to those two countries under accords struck by Chavez to expand his diplomatic clout by lowering their fuel costs through cheap supplies of crude and fuel.

The order to increase exports came from PDVSA’s top executives, according to the internal emails seen by Reuters.

Venezuela’s oil ministry and state-run PDVSA, formally known as Petroleos de Venezuela SA, did not reply to requests for comment for this story.

FUEL STRAIN, BRAIN DRAIN

The strain on the country’s fuel system has been worsened by the departure of staff in PDVSA’s trade and supply unit who are key to ensuring fuel gets to where it’s needed and making payments for imports, three sources close to the company said.

The unit has seen around a dozen key staffers depart since Maduro shook up PDVSA’s top management in January. Among those who left was the head of budget and payments, two sources said.

“Every week someone leaves for one reason or another,” said a PDVSA source familiar with the unit’s operations.

Some have been fired, while others have left since the shake-up inserted political and military officials into top positions and bolstered Maduro’s grip on the company that powers the nation’s economy.

The imposition of leaders with little or no experience in the industry has further disillusioned some of the company’s experienced professionals and accelerated an exodus that had already taken hold as economic and social conditions in Venezuela worsened.

A recent internal PDVSA report seen by Reuters mentioned “a low capacity to retain key personnel,” amid salaries of a few dozen dollars a month at the black market rate.

UNPAID BILLS

The departure of staff responsible for paying suppliers, as well as a cash crunch in the company and the country, have led to an accumulation of unpaid bills for fuel imports into Venezuela.

Had those bills been paid, the supply crunch would have been less acute, the company sources said.

About 10 tankers are waiting near PDVSA ports in Venezuela and the Caribbean to discharge fuel for domestic consumption and for oil blending.

Only one vessel bringing fuel imports has been discharged since the beginning of the week, shipping data showed.

PDVSA ordered some of the cargoes as it prepared alternative supplies while refineries undergo maintenance.

The tankers sitting offshore will not unload until PDVSA pays for their cargoes, said shippers and the company sources.

Should PDVSA pay – up to $20 million per cargo – shortages could blow over relatively soon.

The cash-strapped company has struggled since the global oil price crash that began in 2014 cut revenue for its crude exports. PDVSA is tight on cash as it prepares for some $2.5 billion in bond payments due next month.

While the vessels sit offshore, lines of dozens of cars waited at gas stations in central Venezuela on Wednesday and Thursday. The shortages angered Venezuelans who already face long lines for scarce food and drugs.

PDVSA blamed the supply crunch on unspecified problems for shipping fuel from domestic refineries to distribution centers. The company said it was working hard to solve the gasoline situation by boosting deliveries to the worst-hit regions.

A shortage of trucks to move refined products has also caused bottlenecks, oil workers told PDVSA President Eulogio Del Pino during a visit to a fuel facility this week, asking for help. Trucks are in short supply because the country does not have enough funds to pay for imports of spare parts.

It was unclear when fuel supplies would return to normal, although by late Thursday PDVSA appeared to have distributed some fuel from storage to Caracas and the eastern city of Puerto Ordaz. Lines to fill up at gasoline stations shortened in both cities, according to Reuters witnesses.

Workers at the 335,000-barrel-per-day Isla refinery on the nearby island of Curacao operated by PDVSA said on Friday that the refinery had begun restarting its catalytic cracking unit, which could boost fuel supplies in the coming days.

(Additional reporting by Mircely Guanipa in Punto Fijo and Maria Ramirez in Puerto Ordaz; Editing by Simon Webb and Jonathan Oatis)

Sudan to end fuel, food subsidies by 2019: minister

street vendor in Sudan

By Khalid Abdelaziz

KHARTOUM (Reuters) – Sudan plans to end all subsidies on food and fuel by 2019 and forecasts the lifting of U.S. sanctions will earn its hard currency-starved economy $4 billion per year in remittances, Minister of State for Finance Magdi Hassan Yasin said on Monday.

In the final days of Barack Obama’s presidency, Washington announced plans to lift a 20-year-old trade embargo, unfreeze assets and remove financial sanctions in response to Khartoum’s cooperation in fighting Islamic State and other groups.

The sanctions relief will come in six months if Sudan takes further steps to improve its human rights record and takes steps to resolve military conflicts, including in Darfur.

Even so, Sudanese officials are already looking beyond the sanctions regime.

“The lifting of American sanctions is a turning point for the Sudanese economy,” Yasin, a junior minister, said in an interview.

The path may not be smooth. On Saturday, Sudan’s foreign ministry called President Donald Trump’s temporary travel ban on citizens from seven countries, including Sudan, “very unfortunate”.

If there is no extension, the three-month restriction on Sudanese citizens entering the United States would be over by the time the trade embargo and financial sanctions are removed.

Even so, it is unclear if the tougher immigration rules promised by Trump might impact on trade relations between the two countries.

END OF SUBSIDIES

Sudan’s economy has struggled since South Sudan seceded in 2011, taking with it three-quarters of the country’s oil output and much of Khartoum’s foreign currency and government revenue.

Sudan in November cut fuel and electricity subsidies and announced import restrictions to save scarce foreign currency. Yasin said the government targets scrapping these subsidies entirely by 2019.

“Distortions will be removed from the economy with the total cancellation of consumption subsidies,” Yasin said. “That includes for fuel, electricity, and imported wheat.”

Yasin said the government was considering legislation allowing foreign companies to invest in electricity infrastructure and production for the first time. Huge swathes of rural Sudan have never been connected to the national grid.

“Sudan only produces 34 percent of its electricity needs, so the door will be open for investment in this field, especially after U.S. sanctions are lifted,” he said.

Khartoum has already said it will review its monetary and exchange rate policies once the U.S. sanctions are lifted to lure new foreign investment.

The potential for increased trade and investment flows is already reflecting in the real economy, with the Sudanese pound strengthening to 16 per dollar from 19 before the sanctions announcement.

The pound trades at 6.8 per dollar in the official banking system. The minister said a stronger pound would tame inflation, which hit an annual rate of 30.47 percent in December.

“We expect inflation to start declining beginning this July and for the value of the pound to continue rising with the inflow of remittances from Sudanese abroad and foreign investments,” said Yasin.

(Writing by Eric Knecht; Editing by Ahmed Aboulenein and Richard Lough)

Soccer plane in Colombia crash was running out of fuel

Rescue crews work at the wreckage of a plane that crashed into the Colombian jungle with Brazilian soccer team Chapecoense onboard near Medellin, Colombia,

By Julia Symmes Cobb and Brad Haynes

LA UNION, Colombia/CHAPECO, Brazil (Reuters) – The pilot of a LAMIA Airlines plane that crashed in Colombia, virtually wiping out a Brazilian soccer team, had radioed that he was running out of fuel and needed to make an emergency landing, according to the co-pilot of another plane in the area.

The crash on Monday night killed 71 people. Six survived, including just three members of the Chapecoense soccer squad en route to the biggest game in their history, the Copa Sudamericana final.

Avianca co-pilot Juan Sebastian Upegui said in a chat message with friends that the LAMIA pilot told the control tower at the airport in Medellin that he was in trouble.

Priority had already been given to a plane from airline VivaColombia, which had also reported problems, Upegui said. Reuters confirmed the audio message, which local media played on Wednesday, was from Upegui.

After reporting being low on fuel, the LAMIA pilot then said he was experiencing electrical difficulties before the radio went silent.

“Mayday mayday … Help us get to the runway … Help, help,” Upegui described the pilot as saying. “Then it ended … We all started to cry.”

Relatives of Brazilian journalist Guilherme Marques, who died in a plane accident that crashed into Colombian jungle with Brazilian soccer team Chapecoense onboard near Medellin, mourn during a mass

Relatives of Brazilian journalist Guilherme Marques, who died in a plane accident that crashed into Colombian jungle with Brazilian soccer team Chapecoense onboard near Medellin, mourn during a mass in Rio de Janeiro, Brazil, November 29, 2016. REUTERS/Pilar Olivares

The BAe 146, made by BAE Systems Plc, slammed into a mountainside. Besides the three players, a journalist and two crew members survived.

One survivor, Bolivian flight technician Erwin Tumiri, said he only saved himself by strict adherence to security procedure, while others panicked.

“Many passengers got up from their seats and started yelling,” he told Colombia’s Radio Caracol. “I put the bag between my legs and went into the fetal position as recommended.”

Bolivian flight attendant Ximena Suarez, another survivor, said the lights went out less than a minute before the plane slammed into the mountain, according to Colombian officials in Medellin.

Of the players, goalkeeper Jackson Follmann was recovering from the amputation of his right leg, doctors said.

Another player, defender Helio Neto, remained in intensive care with severe trauma to his skull, thorax and lungs.

Fellow defender Alan Ruschel had spine surgery.

Suarez and Tumiri were shaken and bruised but not in critical condition, medical staff said, while journalist Rafael Valmorbida was in intensive care for multiple rib fractures that partly collapsed a lung.

Investigators from Brazil have joined Colombian counterparts to check two black boxes from the crash site on a muddy hillside in wooded highlands near the town of La Union.

Bolivia, where LAMIA is based, and the United Kingdom also sent experts to help the probe.

HOMAGES PLANNED

The plane “came over my house, but there was no noise,” said Nancy Munoz, 35, who grows strawberries in the area. “The engine must have gone.”

By Wednesday morning, rescuers had recovered all of the bodies, which were to be sent to Brazil and Bolivia. All of the crew members were Bolivian.

A Colombian air force helicopter retrieves the bodies of victims from the wreckage of a plane that crashed into the Colombian jungle with Brazilian soccer team Chapecoense onboard near Medellin, Colombia, November 29, 2016. REUTERS/Jaime Saldarriaga

A Colombian air force helicopter retrieves the bodies of victims from the wreckage of a plane that crashed into the Colombian jungle with Brazilian soccer team Chapecoense onboard near Medellin, Colombia, November 29, 2016. REUTERS/Jaime Saldarriaga

Forty-five of the bodies have been identified, Colombian officials said.

Soccer-mad Brazil declared three days of mourning.

It was a bitter twist to a fairy-tale story for Chapecoense. Since 2009, the team rose from Brazil’s fourth to top division and was about to play the biggest match in its history in the first leg of the regional cup final in Medellin.

Global soccer greats from Lionel Messi to Pele sent condolences.

In the small city of Chapecó in remote southern Brazil, black and green ribbons were draped on fences, balconies and restaurant tables. Schools canceled classes, and businesses closed.

“It’s a miracle,” Flavio Ruschel, the father of Alan Ruschel, told Globo News as he prepared to fly to Colombia. “I don’t think I’ll be able to speak, just hug him and cry a lot.”

Black banners hung from a cathedral downtown and wrapped around a 14-meter statue of one of the town’s founding explorers.

Outside the team’s Conda stadium, a group of hardcore fans put up a tent and promised to keep vigil until the bodies of their idols returned to the city.

“We were there for them in victory, and we’re here for them in tragedy, rain or shine,” said fan Caua Regis. “Like family.”

The club is planning an open wake at their stadium, a city official said.

A homage was also planned for later on Wednesday at the stadium in Medellin of Atletico Nacional, which had been due to play Chapecoense in the regional final in the evening.

The Colombian team wants the trophy to be given to Chapecoense in honor of the dead.

“As far as we are concerned,” the team said, “Chapecoense will forever be the champions of the Copa Sudamericana Cup 2016.”

(Writing by Helen Murphy and Andrew Cawthorne; Additional reporting by Anthony Boadle and Daniel Flynn in Brazil; Editing by Kieran Murray and Lisa Von Ahn)

Oregon County Stops Plant Using Aborted Babies For Fuel

Just days after reports showed a Canadian agency was sending aborted babies to a waste-to-energy station in Oregon to be burned as fuel for electricity, Oregon officials have put an end to the process.

“We are outraged and disgusted that this material could be included in medical waste received at the facility,” Marion County Commissioner Janet Carlson wrote in a Wednesday statement.  “We did not know this practice was occurring until today. We are taking immediate action and initiating discussions with Covanta Marion to make certain that this type of medical waste is not accepted in the future.”

The Oregon Refuse And Recycling Association had confirmed the reception of the aborted babies when they said the Oregon plant was the only one in the region that burned medical waste for electricity.

County officials say they will work with the plant to ensure any future shipments of medical waste does not contain aborted babies.