Ministry to regulate fuel exports, prevent smuggling

Tuesday, March 15, 2005

Venezuela's energy and oil ministry published a resolution last week to regulate fuel exports from Venezuela to Colombia's Guajira and Norte de Santander departments in an effort to crack down on fuel smuggling, government news agency ABN reported.

According to the resolution, the commercialization of fuel on the Colombia-Venezuela border will be subject to the existing customs, tax and fiscal regime.

Would-be exporters wanting to buy fuel from state oil firm PDVSA's service stations for export to Colombia must also obtain a permit from the energy and mines ministry.

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The smuggling of Venezuelan gasoline and other fuels into neighboring countries, such as Brazil, Colombia and Trinidad & Tobago is big business.

According to figures from Fenegas, the association that groups Venezuela's gas-station owners, about 100,000 barrels of oil make it out of Venezuela illegally every day, out of a total production figure of 2.75 million barrels of oil a day.

And the incentive is strong: a liter of premium gasoline retails for less than US$0.05 in Venezuela, but it can be sold for more than ten times that in Colombia.

Smuggling occurs in broad daylight and sometimes under the noses of Venezuelan authorities, which often turn a blind eye.

However, a recent diplomatic spat between Colombia and Venezuela, triggered by the kidnapping of a wanted Colombian guerrilla on Venezuelan soil, meant the closing of the border between the countries.

The move paralyzed gas smuggling and revealed the extent to which the border regions of Colombia are dependent on cheap, illegally imported Venezuelan fuel.