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Venezuela out of gas, Maduro out
of options

Mathias Delacroix /AP

A city worker sprays disinfectant at a gas station in the Chacao neighborhood of Caracas.

- Oil-rich Venezuela is running out of gas
- Maduro is running out of options

By Ana Vanessa Herrero and Anthony Faiola/Washington Post

CARACAS
Petroleumworld 04 17 2020

With friends and family stuck indoors and buses rarely running, Onasis Muñoz missed several lifesaving dialysis sessions for his failing kidneys. When his blood pressure started to dangerously spike, he had one option left: a 20-minute hike to the nearest clinic.

Venezuela's strict national coronavirus lockdown wasn't his main problem. Rather, this broken country, which boasts the world's largest proven oil reserves, is running out of gas.

“There were no medicines [before], and now no gasoline,” said Muñoz, 28, who lives in Venezuela's coastal Carabobo state, two hours from the capital. When drugs were scarce last year, he said, he went eight months without medication. Now he can source his medicines, but the gasoline shortage has made his dialysis sessions, at a hospital 17 miles from his home, nearly impossible to reach.

“What hope do I have?” he asked.

Read more: In Venezuela's oil capital, life is a struggle. So is death.

Stung by one of the globe's worst economic crises long before anyone had heard of covid-19, the socialist nation is used to deprivation. Venezuelans have struggled for years against shortages of everything from food to toilet paper to drinkable water.

Shortages of gasoline — nearly free and considered a national entitlement in this OPEC nation — began in some parts of the country years ago, as local refineries started to fail, and smugglers funneled truckloads of cheap Venezuelan fuel to black markets in Colombia and Brazil. But analysts are calling the severity of the current gas shortage unprecedented — so bad that vegetables are rotting on farms, doctors can't get to work and even the people of Caracas, a bubble ordinarily spared the worst of Venezuela's misery , are waiting in gas lines miles long.

The energy crisis is the latest bad news for authoritarian President Nicolás Maduro , who is now facing the most perilous moment of his embattled tenure.

Venezuela's pivotal oil sector, long in decline, has entered a free fall as prices drop amid the pandemic-induced global economic slowdown and output plummets to the lowest level since the 1940s. Venezuela's inability to sell its crude — partly due to U.S. sanctions, but also shrinking global demand — has led the government to idle some of its oil fields.

The coronavirus, meanwhile, is presenting Venezuela's already crippled health-care system with a critical test, one that local doctors say it is uniquely unprepared to pass . Sensing his vulnerability, Maduro's adversaries in the Trump administration are ratcheting up efforts to oust him . The Justice Department indicted Maduro and his senior officials last month on narcoterrorism charges, and the Pentagon has dispatched warships to the Caribbean to shut down the cocaine corridor that Washington says helps keep Maduro afloat.

Read more: U.S. proposes transitional government for Venezuela, without Maduro or Guaidó

Venezuelan migrants return to homeland during coronavirus outbreak Almost two million Venezuelan migrants have fled to Colombia, but the lockdown to curb the spread of coronavirus has left many without work or residence. (Reuters)

Maduro's domestic political nemesis — Juan Guaidó , the National Assembly president recognized by the United States and more than 50 other nations as Venezuela's rightful leader — has faded into the background during the outbreak, unable to hold mass rallies and dealing with a growing revolt within his own coalition. But Guaidó's weakness does not mean Maduro is strong.

“The gas shortages are turning into one of the biggest challenges he's faced since he took power,” said Geoff Ramsey, Venezuela director for the Washington Office on Latin America. “Gas shortages are not new in Venezuela, but the extent of this one is. Health workers can't even go to work. It has a ripple effect across Venezuelan society.”

The myriad reasons behind the gas shortage underscore the breadth of Maduro's woes.

Venezuela sits on massive oil reserves, but a lack of spare parts and a brain drain of technicians have crippled its gasoline refineries. Venezuela for years sent shipments of its particularly sludgy crude to Citgo , a U.S. subsidiary of PDVSA, the Venezuelan state oil giant, which processed the oil and shipped back gasoline. But that arrangement ended after Washington broke ties with Maduro last year, wrested control of Citgo from PDVSA and slapped an oil embargo on the country.

The Russian state-controlled oil giant Rosneft stepped in, striking lucrative deals with Venezuela to ship and sell its oil on global markets . But then the Trump administration imposed sanctions on Rosneft's trading arm in February for aiding Maduro, and the company sold its Venezuelan investments to a more secretive entity owned by the Russian state.

Read More: In the U.S. embargo on Venezuelan oil, Russia is a clear winner

Russia appears to have halted gasoline shipments to Venezuela, at least for the time being.

“They aren't getting gas from the Russians,” said Russ Dallen, a managing partner at Caracas Capital Markets, a financial and consulting firm that tracks Venezuelan oil.

The government has received recent shipments of diesel under ongoing deals with European firms that have holdings in the country, allowing Maduro to mobilize some trucks for food distribution, particularly in the capital. The country has sought new deals for gasoline through a handful of Mexican companies that are now shipping its oil to Asia, according to industry insiders, with limited success.

The government managed last week to restore limited operations at one of its refineries, those insiders say. But the plant for now is capable of producing only low-quality fuel that must be mixed into a commercial product. Its actual output, at least for the next several weeks, they say, will probably be little to none as repairs continue.

Desperate for a lifeline, the government turned last month to a loyalist billionaire — Wilmer Ruperti — for help. The Venezuelan oil magnate helped Hugo Chávez, Maduro's late mentor, manage a gas shortage in 2002 by hiring a fleet of Russian tankers to ferry fuel to Venezuela in the midst of a general strike.

An invoice obtained by The Washington Post shows that Ruperti's Swiss-based Maroil Trading AG billed the Maduro government $12 million for up to 250,000 barrels of gasoline.

“But it hasn't arrived yet — they're trying to find the ships to bring it,” said one of the Venezuelan oil insiders, who spoke on the condition of anonymity out of fear of government retribution. “Even when it does, if it does, it won't last long.”

Read more: Russian oil giant Rosneft pulls out of Venezuela amid U.S. squeeze on Maduro

Ruperti, whose gasoline deal with Maduro's government was first reported by the Associated Press, could not be reached for comment. Venezuelan government officials did not respond to a request for comment.

In mid-March, massive lines for gas, long a fact of life in some provincial capitals and rural areas, began to hit more-insulated Caracas. A government-issued list of pandemic-related “priority” customers included doctors, but even they are whiling away precious hours in line.

“On Monday, I got to the gas station at 4:10 a.m.,” said Luis Báez, a surgeon at the city's Ávila Clinic. “I was 49th in the special line for the medical personnel. I had to wait nine hours and 45 minutes to fill my tank.

“I felt impotent sitting there, waiting.”

Gas station workers say authorities are now rationing supplies to five gallons for small cars and 10 for trucks, vans and ambulances. Eulodio Díaz, 61, works at a pump in southern Caracas.

“As we run out of gasoline, we decrease the amount we can offer per customer,” he said. “What we receive lasts only for a few hours because of the high demand. Many times they are aggressive with us. This is not my fault; I'm only following orders.”

For the people of Caracas, the lines are the latest sign of the crumbling state. Francisco Durán, a 35-year-old food distributor, was one of 100 customers waiting recently at a gas station in northern Caracas. He parked his white Honda Accord before dawn. Seven hours later, he was still hours away from the pump.

“I have a quarter-tank left and I desperately need gas,” he said. “I can't skip work. Not under these circumstances.”

Read more: U.S. indicts Venezuela's Maduro on narcoterrorism charges, offers $15 million reward for his capture

Though the gas shortages are causing delays in Caracas, they do not yet seem to have impacted the availability of essential goods in the stores. That's less true farther from the capital.

Locals in Táchira state, on the Colombian border, have weathered days-long gas lines for years. Robert Maldonado, a farmer and agricultural activist, said farmers in the region managed to haul only 10 percent of their produce to a large weekend wholesale market because of the shortages. He said most of the rest — about 4,500 tons — is now at risk of rotting on the farms.

“We are losing our produce because . . . we don't have gas to get it to market.”

 

- Faiola reported from Miami. Mariana Zuñiga in Caracas contributed to this report.


By Ana Vanessa Herrero and Anthony Faiola from The Washington Post

washingtonpost.com
04 16 2020

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