OREANDA-NEWS. December 22, 2017. Venezuelan state-owned PdV and Trafigura are discussing a long-term agreement to swap around 200,000 b/d of Venezuelan crude for similar volumes of imported gasoline, diesel and base oils, the energy ministry said.

The talks are the latest sign of Venezuela's dwindling capacity to produce and supply fuel to the local market in spite of holding among the world's largest deposits of crude.

Trafigura could not be reached for comment.

The crude volume PdV is offering Trafigura in exchange for the oil products is equivalent to almost 11pc of the country's November crude production of 1.837mn b/d, according to official Venezuelan data reported to Opec.

There is no shortage of obstacles to executing such a swap. Venezuela's crude production is rapidly declining, and the Switzerland-based trading house would likely tread carefully in light of US financial sanctions imposed on Venezuela and PdV in August 2017.

Drivers across Venezuela routinely wait in line for hours to buy rationed fuel. Gasoline from PdV's decrepit refineries, officially sold at 91 and 95-octane levels, is believed to be of far inferior quality.

In the absence of LPG, millions of Venezuelans now also cook with wood in the interior of the country, or use precarious electric hot plates in the city slums.

PdV yesterday blamed an "international blockade" for causing critical gasoline and diesel shortages during the second half of 2017 in up to 10 states, including Apure, Anzoategui, Amazonas, Barinas, Bolivar, Carabobo, Monagas, Tachira, Trujillo and Zulia.

Service station operators in seven other states including Aragua, Cojedes, Guarico, Lara, Merida, Portuguesa and Sucre are also reporting worsening fuel supply deficits they attribute to a drop in the frequency of PdV's weekly tanker truck deliveries.

FUTPV union leader Ivan Freitas, a frequent government critic, scoffed at PdV's claim that the US sanctions are responsible for Venezuela's fuel deficit.

PdV's local refineries with a combined 1.3mn b/d nameplate capacity are "only 30pc operational at best." The 940,000 b/d CRP refining complex on Paraguana is stalled below 15pc of nameplate, Freites said. The CRP includes the 305,000 b/d Cardon refinery and 635,000 b/d Amuay refinery.

Amuay has never recovered operationally from the massive olefins explosion in August 2012 that killed over 40 people and caused extensive structural damage to parts of the refinery that to date have never been repaired, Freites said.

PdV is also not generating enough cash from its falling oil exports to finance fuel imports. Crude, products and services suppliers now routinely demand payment in advance before unloading cargoes at PdV terminals, and the US sanctions have compounded PdV's financial difficulties, with many banks now reluctant to do any new business with the Venezuelan company.