Collapsing Venezuela oil exports seen to be pushing prices higher

@FT reporters

With Venezuela's exports of crude on the brink of collapsing below 1m barrels a day to historic lows, the bull case for energy has additional support as creditors of the cash-strapped national oil company PDVSA threaten to seize overseas assets.

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A drop in both Venezuelan and Iranian supply could provide the "perfect cocktail" for oil at $100 a barrel next year or sooner, said analysts at London-based broker PVM.

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troubles mount for PDVSA,Russ Dallen of investment bank Caracas Capital saying that the company faces "an avalanche" of lawsuits over unpaid bonds.

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The enforcement of a $2bn arbitration award, related to the nationalisation of Conoco projects in Venezuela in 2007, prompted PDVSA to suspend oil storage and shipping from Caribbean facilities and order the return of tankers to national waters to avoid seizure.

"This shows how devastating not paying arbitrations or debts that are owed by PDVSA . . . could be for the Venezuelan oil exports," said Francisco Monaldi, at Rice University's Baker Institute for Public Policy. "This will worsen the already catastrophic situation".

...fresh round of claims by PDVSA's contractors could further stymie exports.

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SNC-Lavalin, a Canadian engineering and construction group, filed a legal suit in New York last week for default on a promissory note that would allow it to seize assets worth $25m. SNC's claim is small, but others could follow from those holding identical financial instruments worth more than $2bn.

Mr Dallen of Caracas Capital said that SNC and the other noteholders could even get ahead of ConocoPhillips in the queue to seize PDVSA assets. "SNC doesn't have to register its claim in court, it can just go ahead and enforce," he said.

Such claims could multiply quickly if SNC's lead is followed by holders of about $23bn worth of PDVSA's eurobonds,...wave of legal actions and asset seizures could go against creditors' interests. "PDVSA doesn't have any money," "Creditors need to co-operate."