Venezuela's state-owned oil company is turning to letters of credit (L/Cs) to help it obtain the materials it needs to keep its oil exports flowing.

Petróleos de Venezuela (PdV) needs to import light crude and petroleum products including naphtha and other substances used as diluting additives for its Orinoco extra-heavy crude exports.

Severe congestion

PdV's maritime terminals in and around Venezuela are experiencing severe tanker congestion and longer turnaround times due to regular breakdowns of crude and products handling infrastructure.

The state-owned oil company is also experiencing payment, cash flow and credit difficulties, leading to a refusal by suppliers to extend credit to PdV.

L/Cs jeopardised

As a result, the company's recent purchase tenders are offering payment proposals that include, as well as L/Cs, cash up front and crude for blend swaps as alternative forms of payment.

Congestion at PdV's loading and unloading facilities may also cause delays that could jeopardise L/C terms in respect of delivery dates.

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