Breaking News
Investing Pro 0
🚨 NDVA surged 43%. This AI Chipmaker Could Be Next See Analysis

Exclusive-Venezuela tightens oil prepayment rules, documents show

Published Jan 30, 2023 06:22AM ET
Saved. See Saved Items.
This article has already been saved in your Saved Items
2/2 © Reuters. FILE PHOTO: An oil tanker is docked while oil is pumped into it at the ships terminal of PDVSA's Jose Antonio Anzoategui industrial complex in the state of Anzoategui April 15, 2015. REUTERS/Carlos Garcia Rawlins/File Photo/File Photo 2/2
Add to/Remove from Watchlist
Add to Watchlist
Add Position

Position added successfully to:

Please name your holdings portfolio

By Marianna Parraga

HOUSTON (Reuters) - Venezuela's state oil firm PDVSA is toughening terms for buyers after a month-long halt to most exports of crude and fuel, demanding prepayment ahead of loadings in either cash, goods or services, company documents showed.

PDVSA's new Chief Executive Pedro Tellechea put the move in place this month. It reinforces measures implemented last year after several buyers skipped out on payments for oil, which provides most of the South American country's income.

After taking the helm, Tellechea launched an extensive audit of supply contracts, according to a written order to PDVSA seen by Reuters.

His order froze loadings, even pushed some vessels away that had begun receiving oil, until the review was complete and sale contracts could be modified or ratified, according to internal documents and three people familiar with the matter.

As of Jan. 27, a total of 28 vessels including 21 supertankers were waiting near PDVSA's ports to load some 45 million barrels of crude and fuel for exports. Another four ships had loaded but were waiting for authorizations to depart, according to vessel monitoring service

The new terms narrow a wide variety of contract modalities to a few requiring prepayment of cargoes entirely in cash or allowing payment via goods and services to Venezuela, but they must be received before Venezuela will release the oil, according to the documents.

PDVSA did not reply to a request for comment.


PDVSA explained in a contract viewed by Reuters that cash prepayment puts the company "in a favorable business position because it would secure income for the country that is essential to solve its economic situation."

The new models set deadlines of less than 30 days for completing bank transfers or settling outstanding debt balances.

In cases of swaps where the related oil sale exceeds the value of the goods or services, Venezuela must receive any outstanding balance in kind before the state will assign the next cargo, one of the documents showed.

Even long-term buyers must abide by the new rules that require payment in full by cash before each oil delivery.

So far this month, swap contracts with Cuba's Cubametales and Iran's state firm Naftiran Intertrade Co (NICO) were among the few in force.

A contract with Chevron Corp (NYSE:CVX) for repaying debt was unaffected. PDVSA has continued to load Chevron-chartered vessels and discharge imports from the U.S. firm.

A similar contract to repay debt to China with oil has continued, although the customer has faced more than 30 days of loading delays, according to shipping documents and Refinitiv Eikon data.

Since the suspension was imposed in early January, only one of PDVSA's list of new clients and intermediaries, Hangzhou Energy, has been authorized to resume loading following a 12-month contract extension agreed this week, according to the documents and one of the sources.

Other contracts are in the final review and should be authorized soon, another source said.


Before U.S. sanctions, PDVSA used to receive letters of credit as guarantees if buyers were cleared to become established customers, and payments were completed in 90 days. Audit mechanisms were suspended about two years ago as the sanctions forced out traditional clients who were replaced by little known intermediaries with no track record of oil sales.

Some of those new intermediaries have faced court cases under accusations of corruption and embezzling.

Following an increase in the number of oil cargo departures without proper compensation to PDVSA, the company last year demanded to be prepaid at least partially in cash or goods. But the measure had not fully stopped the furtive cargoes.

Now, most of the proposed contracts imply a form of swap, so PDVSA pays with oil in return for the government receiving food, medicine or services, including home reconstruction and telecommunications equipment.

The suspension has caught even PDVSA employees off-guard.

"While contracts remain suspended, we have been told to register all exports in Excel sheets," instead of using PDVSA's contract administration system, a company employee said.

Exclusive-Venezuela tightens oil prepayment rules, documents show

Related Articles

Add a Comment

Comment Guidelines

We encourage you to use comments to engage with other users, share your perspective and ask questions of authors and each other. However, in order to maintain the high level of discourse we’ve all come to value and expect, please keep the following criteria in mind:  

  •            Enrich the conversation, don’t trash it.

  •           Stay focused and on track. Only post material that’s relevant to the topic being discussed. 

  •           Be respectful. Even negative opinions can be framed positively and diplomatically. Avoid profanity, slander or personal attacks directed at an author or another user. Racism, sexism and other forms of discrimination will not be tolerated.

  • Use standard writing style. Include punctuation and upper and lower cases. Comments that are written in all caps and contain excessive use of symbols will be removed.
  • NOTE: Spam and/or promotional messages and comments containing links will be removed. Phone numbers, email addresses, links to personal or business websites, Skype/Telegram/WhatsApp etc. addresses (including links to groups) will also be removed; self-promotional material or business-related solicitations or PR (ie, contact me for signals/advice etc.), and/or any other comment that contains personal contact specifcs or advertising will be removed as well. In addition, any of the above-mentioned violations may result in suspension of your account.
  • Doxxing. We do not allow any sharing of private or personal contact or other information about any individual or organization. This will result in immediate suspension of the commentor and his or her account.
  • Don’t monopolize the conversation. We appreciate passion and conviction, but we also strongly believe in giving everyone a chance to air their point of view. Therefore, in addition to civil interaction, we expect commenters to offer their opinions succinctly and thoughtfully, but not so repeatedly that others are annoyed or offended. If we receive complaints about individuals who take over a thread or forum, we reserve the right to ban them from the site, without recourse.
  • Only English comments will be allowed.
  • Any comment you publish, together with your profile, will be public on and may be indexed and available through third party search engines, such as Google.

Perpetrators of spam or abuse will be deleted from the site and prohibited from future registration at’s discretion.

Write your thoughts here
Are you sure you want to delete this chart?
Post also to:
Replace the attached chart with a new chart ?
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Thanks for your comment. Please note that all comments are pending until approved by our moderators. It may therefore take some time before it appears on our website.
Are you sure you want to delete this chart?
Replace the attached chart with a new chart ?
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Add Chart to Comment
Confirm Block

Are you sure you want to block %USER_NAME%?

By doing so, you and %USER_NAME% will not be able to see any of each other's's posts.

%USER_NAME% was successfully added to your Block List

Since you’ve just unblocked this person, you must wait 48 hours before renewing the block.

Report this comment

I feel that this comment is:

Comment flagged

Thank You!

Your report has been sent to our moderators for review
Continue with Google
Sign up with Email