October 3, 2019 / 6:17 PM / 8 months ago

UPDATE 1-Venezuela's PDVSA, China's CNPC halt oil blending over high stocks -sources

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Oct 3 (Reuters) - Venezuela’s state-run PDVSA and China National Petroleum Corp (CNPC) this week halted oil blending at their joint venture, Petrosinovensa, because of an accumulation of crude stocks arising from U.S. sanctions on the OPEC-member nation, four people familiar with the matter said.

Venezuela reshuffled oil output in June to focus on producing Merey heavy crude, a blend of heavy and light oil most preferred by Asian refiners, hoping to secure exports. PDVSA lost its largest U.S. customers after its buyers were banned by Washington from dealing with PDVSA, controlled by President Nicolas Maduro.

Petrosinovensa and Petropiar were ordered to produce as much Merey as possible for Asian customers. But in August CNPC suspended purchases of Venezuelan oil due to the U.S. measures, adding to an accumulation of inventories that has forced PDVSA to cut back output.

“Petrosinovensa’s blending facilities have been halted as inventories reached their maximum level. They have been unable to market the oil,” one of the sources said.

Petrosinovensa was the only project blending oil in Venezuela after another joint venture, Petropiar, halted operations earlier this year for the same reason.

PDVSA did not immediately reply to a request for comment.

The country’s total crude inventories climbed to 38.8 million barrels at the end of September, almost 3 million barrels over the level reached a month earlier, according to data intelligence firm Kpler.

U.S President Donald Trump’s administration has imposed several rounds of sanctions on Venezuela this year to increase pressure to oust Maduro, whose 2018 re-election was considered a sham by most Western countries.

Petrosinovensa produced 72,000 barrels per day (bpd) of Merey heavy crude in September, versus a planned 110,000 bpd. Petropiar stopped blending in mid-September, according to PDVSA internal documents seen by Reuters.

PDVSA and CNPC also suspended expansion activity at one of Petrosinovensa’s two blending production facilities, and workers there were ordered to return home, two of the people added.

Venezuela’s production fell to around 650,000 bpd in September, according to independent estimates. But oil exports increased slightly to 845,000 bpd that month as a result of larger shipments to Cuba and Europe.

Reporting by Marianna Parraga in Mexico City and Mircely Guanipa in Punto Fijo, Venezuela; Editing by Steve Orlofsky

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