Venezuelan petcoke contract dispute fuels ship queues, hunt for options

By Marianna Parraga and Sudarshan Varadhan

HOUSTON (Reuters) -The sudden suspension of a Venezuelan contract that had boosted its exports of petroleum coke has led to a bottleneck of vessels waiting to load and sent customers scrambling for alternative supplies, according to sources and data.

A 2017 contract between Venezuelan state oil company PDVSA and Geneva-based Maroil Trading helped the country's exports of the oil byproduct to grow seven fold between 2021 and 2022. But the deal was suspended last month amid a dispute over accounts receivable and the extension of the contract.

Venezuela's petcoke exports dropped to 56,000 metric tons in June, from more than 620,000 tons in January. So far this month, only one 70,000-ton cargo has been authorized by PDVSA to load. But as of Tuesday the bulk carrier had not sailed, shipping data seen by Reuters showed.

Eight other vessels are near Venezuelan ports waiting to load a combined 350,000 tons, according to the data. Petcoke is largely used to fire cement kilns in countries from France to China.

PDVSA did not reply to a request for comment. David Houck from law firm Winston & Strawn, which represents Maroil, said that as negotiations about the contract were ongoing, Maroil was not willing to discuss details.

Venezuela last year exported some 3.3 million metric tonnes of petcoke, mostly traded by Maroil, which in recent years has signed commercial agreements with other companies to reach final customers.

At Venezuela's eastern region, where most petcoke is produced, stored and shipped, union representatives worry that the contract suspension could lead to an excessive accumulation of the product in open areas, where it releases particles to the air that can cause respiratory issues.

"Workers have not been officially informed about the contract status," said oil union leader Jose Bodas. "Those petcoke piles, which are contaminating, had been reduced. If product is not exported, new problems will come."

ALTERNATIVES

A senior executive from a cement company in southern India said its Venezuelan petcoke supplier has canceled three contracts since last month, citing uncertainties related to its ability to deliver the product.

"We expect someone else to step in, in place of Maroil now," the company executive said, declining to disclose the name of its suppliers.

PDVSA has in recent months approved new buyers and intermediaries for its petcoke sales, a move to expand its customer roster and directly reach overseas buyers.

"No Indian buyer should attempt to get Venezuelan material without a guarantee that payment would only be made on discharge," said another customer, citing past delivery delays.

International petcoke prices have fallen this year amid supply-demand imbalances, according to Gujarat-based trader I-Energy Natural Resources. But a similar drop in coal prices, which is an alternative fuel, has motivated some importers in Asia to switch away from Venezuelan petcoke.

Venezuela-origin petcoke sold at $105 per ton at the end of last week. In contrast, Saudi-origin petcoke was priced at $103 per ton, and U.S. Gulf Coast petcoke for India delivery traded at $105 per ton in the same period, according to I-Energy.

(Reporting by Marianna Parraga in Houston and Sudarshan Varadhan in Singapore; Additional reporting by Mircely Guanipa in Maracay. Editing by Stephen Coates, Josie Kao and Diane Craft)