Oil-rich Venezuela to import oil for first time

Voluntad Popular

Opposition leader Leopoldo Lopez's wife, Liliana Tintoti, embraces a supporter during a protest demanding her husband's release from jail.

Faced with rapidly declining oil production in the state-owned Petroleos de Venezuela oil company (PDVSA), Venezuela, the country with the world's largest oil reserves, may be forced to start importing oil for the first time.

In an unprecedented move, President Nicolás Maduro's government plans to start importing crude oil in order to blend it with Venezuela's own crude and keep the country's overall production from falling further, according to a recently released report by Reuters news agency, citing an internal PDVSA document.

The move comes as the company scrambles to cut costs to partially solve its cash flow problems. Reuters reported that PDVSA is considering importing Algerian Saharan Blend light crude instead of costly naphtha that it has been buying since 2013 to use for its blends. These blends are made to convert the extra-heavy oil into an exportable product amid the decline in local production of medium and light crude oils previously used as diluents and delays in construction of new plants that can improve the quality of the crude.

The state-run company sent 4.99 million barrels of diluted crude oil in August to the United States -- some 166,000 barrels per day -- in 10 cargo shipments, according to Reuters trade flows data.

The Venezuelan company did not immediately answer Reuters requests for comments.

For experts and opposition leaders, the news should serve as a warning bell. 

"These imports in a country that claims to have the largest oil reserves in the world is one of the biggest contradictions," said Juan Fernandez, former CEO of planning for PDVSA, who now resides in Miami.

Opposition leaders point to after 15 years of the Bolivarian Revolution, sacrificed maintenance and expansion of the Venezuelan oil industry to take full advantage of the oil income for government programs. PDVSA does not disclose its monthly production and export volumes. 

"They have not been able to lift production," added Fernandez. "In the western region, production was approximately about 1.3 million barrels per day. Today (it) is expected to fall below 600,000."

In a recent column, Congresswoman Maria Corina Machado agreed.

"They did it," said Machado. "The country with the largest oil reserves in the world now imports oil. They ruined agriculture and fishing industries, the production of coffee, cement, tourism, steel. Everything he touches the scheme collapses. That left the oil."

Opposition leader's trial to continue Sept. 10

Opposition leader Leopoldo Lopez returned to court last week for the resumption of the trial in which he is accused of inciting violence in protests against the Venezuelan government.

Lopez was moved early in the morning, handcuffed and amid a heavy security, from the Ramo Verde military prison in the outskirts of Caracas to the court where the proceedings take place, in the center of the capital.

Lopez, leader of the Voluntad Popular party, is accused by the prosecution of "fire and damage, public incitement and conspiracy" during the Feb. 12 protest in Caracas, which resulted in the first two of the 43 deaths that occurred during the opposition protests from February to May.

The proceedings began two hours late. Four forensic detectives (CICPC) took the stand for close to seven hours as the first of more than 70 witnesses for the prosecution.

In a previous hearing, Judge Susana Barreiros disallowed the defense to present evidence in favor of Lopez.

Lopez did have the opportunity to speak, and he insisted on the political character of the trial.

"What kind of trial is this, where I cannot present evidence to defend myself," asked Lopez. "Each new session further shows the political character of this trial."

The trial will resume Sept. 10.

Follow Helena on Twitter @helepoleo

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