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31 August 2023

Eni and Repsol Send Naphtha Shipment to Venezuela to Ease Fuel Shortages

President Nicolás Maduro has received a much-needed boost from major oil companies Eni Spa and Repsol SA through a naphtha shipment aimed at alleviating fuel scarcity that has resulted in long queues at Venezuelan service stations.

Venezuela's state oil company, Petroleos de Venezuela SA (PDVSA), is currently unloading a shipment of 260,000 barrels of naphtha sent by Italy's Eni and Spain's Repsol, according to three sources familiar with the situation. The naphtha will be blended with less refined gasoline produced at the Paraguana refining center to help address shortages for Venezuelan drivers, one of the sources explained.

While the exact terms of the exchange remain unclear, discussions are ongoing between the European firms and PDVSA for a fuel supply schedule, as confirmed by one of the sources. Eni declined to comment on the transaction's details, citing their sensitivity from a commercial perspective, and emphasized that all its activities in Venezuela are in compliance with sanctions provisions. Repsol and PDVSA have not provided an immediate response to requests for comment.

This marks the first instance of European major companies sending naphtha to Venezuela since the United States imposed sanctions on PDVSA in 2019. Prior to the sanctions, Venezuela regularly supplied crude oil in exchange for gasoline, diesel, and diluent from companies including Repsol, Reliance, and a subsidiary of Rosneft.

Eni and Repsol have been exporting oil to Venezuela since last year after receiving approval through a comfort-type letter from the US Treasury Department.

The Minerva Xanthe ship arrived on August 29 from Eni's Milazzo port, according to data compiled by Bloomberg.

Currently, Venezuela's daily fuel production stands at around 95,000 barrels, which falls significantly short of meeting demand. Most of the supply from its refining system is directed to the capital, Caracas, to prevent disruptions. Other cities in the country have long endured rationing, with many fuel stations either closed or operating for only a few hours each day.