http://www.canoe.ca/ReutersNews/Y2K-ENERGY-VENEZUELA.html

Link

November 19, 1999

FOCUS-Venezuela plans Y2K halt to oil loadings

CARACAS (Reuters) - Venezuela, the world's No.3 oil exporter, will suspend the loading of oil tankers for 10 hours around midnight on December 31 as a preventive measure against the millennium bug, the state oil company said Friday. The decision was one of the first signs that the global oil industry is concerned about the effect Y2K could have on oil shipping. Ships loading during the date change will be disconnected from supply hoses between 8 p.m. (2400 GMT) on December 31 and 6 a.m. (1000 GMT) on January 1, a Petroleos de Venezuela S.A. (PDVSA) spokesman said. The spokesman said PDVSA was fully prepared for the date change, "but I think this is something like a backup measure just in case." "The company has made a great effort in Venezuela to be totally covered for any Y2K effects... but there is some concern that something could go wrong on a global basis despite those efforts," he added. Venezuela produces 2.7 million barrels of oil daily and is the largest supplier of crude oil and refined oil products to the United States. PDVSA discussed the issue recently with some of its customers in the United States, and they came to an informal agreement which the spokesman said could apply globally. "It was analyzed and discussed in the last meeting of the American Petroleum Institute between the different traders and companies so that it would be a kind of global agreement," he said. In exceptional cases, some Venezuelan oil export terminals will suspend pumping for eight hours from 10 p.m. (0200 GMT) while others might stop for 12 hours from 6 p.m. (2200 GMT), he added. PDVSA plans to continue oil production and refining as usual over the crucial dates. VENEZUELA HAS "MODERATE RISK" OF Y2K DISRUPTION The U.S. State Department rates Venezuela as having a "moderate risk" of Y2K disruption, but with China and Indonesia it also ranks among the least prepared in the world. PDVSA said in August that it was fully prepared for Y2K, which threatens to cause malfunctions in computer systems that cannot process a year ending in "00". The company did a test in September which Energy and Mines Minister Ali Rodriguez said was "highly satisfactory". No organization in the world can say for sure whether it will encounter problems or not. "They are going to keep the systems running but stop loadings, so it makes any incident easier to contain. In that sense it is not a bad action," said a foreign executive involved in Venezuelan oil shipping. A regional oil trader familiar with Venezuela said the action might incur some extra shipping costs, but said it was not a serious problem. "We might have some small demurrage, but other than that we don't see any problem," he said. Demurrage is an extra charge made by ship owners for delays in loading oil. Oil consumers around the world are expected to stock up on supplies ahead of the New Year, which officials say could create a surge in demand in December.

-- Homer beanfang (Bats@inbellfry.com), November 19, 1999

Answers

Mr. Beanfang;

Just dropping in to say thank you. I always click on your informative posts.

-- Not Whistlin' Dixie (not_whistlin_dixie@yahoo.com), November 19, 1999.

The only "serious problem" that might be encountered is when they cannot restart loading the ships... Otherwise, it is a reasonable precaution that may eliminate a bad spill.

A minor problem might be the half day drop/stoppage of the supply chain (pipelines, ships, etc.) world-wide!

-- Mad Monk (madmonk@hawaiian.net), November 19, 1999.

Hey...don't we have a couple of guys in Caracas? Where are they. We need a current update on the oil situation. I remember one was going to take his Christmas vacation here in the States and not go back!

Taz

-- Taz (Tassie123@aol.com), November 19, 1999.

We got a full section on Y2K in the main newspaper today, ...... but there is still no reliable information. Everything is to "goody goody".

BTW we won't have water in the capital city for 30 hours (starting tomorrow). I guess they are testing.

This is a copy of a post I sent a couple of days ago:

Cell phones were out of service all day Sunday, my two phones lines at home (in Caracas) are out of order more than a month with numbers assigned that are not my numbers.

Water billings are a mess. My bill for October came up to about $2.000 when I normally pay $27.

Electricity comes and goes frecuently.

And the Goverments continues saying that everything in "VENEZUELA IS Y2K FINE"

Should I move up to Florida?

-- Scared in Caracas Venezuela (Venezuela@mess.com), November 19, 1999.

That is a loss of over 1,100,000 barrels. This information alone is going to raise gas prices, before it even happens.

-- Hawk (flyin@high.again), November 19, 1999.

Hawk,

I don't think one came assume that volume. You're assuming all loading ports are in operation 24 hours a day, 7 days a week. This isn't the case. Like other OPEC members, the Venz have cut their production (& hence their exports) down from 3.4 mill barrels/day to 2.9. I don't know what their loading facilities export capacity is but I'm betting its over 4 mil /day. With this shutdown planned in advance they can bang out some more barrels before and (without probs) after this rollover break.

What's significant about this announcement is the implications for other foreign producers and exporters. Are they all gonna shut down for rollover? We know know several US pipelines are and the Venz are? One would assume the less prepared exporters will as well.

A bigger question is: Are the Venz refineries compliant? They export about 400,000 barrels a day of gasoline and/or basestocks to the US. These planned announcements have us focusing on the smaller issues of pipelines and loading facilities while North Sea production fields and refinery problems have far bigger implications and complexities.

-- Downstreamer (downstream@bigfoot.com), November 20, 1999.