Petrojam, the Jamaican oil refinery which is jointly owned by the Government of Jamaica and the Government of Venezuela, has so far not responded to news which broke mid-week that Venezuelan joint venture partner PDVSA is asking for upfront payment for some production inputs.

Specifically, as reported by Reuters, PDVSA has requested its partners to pay for naphtha or light crude, needed to dilute the extra heavy oil produced. Before this, PDVSA was contractually obligated to provide the substance.

Reuters says that the company has now asked some of its foreign partners to cover the payments as of this year.

Questions posed by the Jamaica Observer to Petrojam regarding the new request were not answered up to press time.

Petrojam imports about nine million barrels of crude per year — most of it through its joint venture partner.

The local refinery entered the joint venture in 2006 when the Government of Jamaica sold 49 per cent of its shares to PDVCaribe.

PDVCaribe is a subsidiary of Petróleos de Venezuela (PDVSA).

Imported diluents are currently needed as PDVSA’s own light and medium oil output has declined.

Reuters points out that a barrel of Venezuelan heavy crude needs around 30 per cent to 50 per cent of diluent to be exportable.

“A joint venture that produces 25,000 barrels per day, for example, would spend around US$9 million a month on naphtha purchases at current spot prices in the US Gulf Coast,” it was stated on Wednesday.

The request for payment from joint venture partners comes as PDVSA’s revenues plummet from falling oil prices which now average around US$27 per barrel on the Brent and West Texas Intermediate benchmarks.