U.S. Taking in More than Half of Venezuela's Crude Oil Exports

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Written by Daniel Graeber for IIR News Intelligence (Sugar Land, Texas)

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Summary

Thirsty for heavier slates of crude oil, and with war in the Middle East sidelining legacy suppliers, imports from Venezuela into the United States are now in second place behind Canada.

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To the Victors ...

As the United States leans on the Americas for supplies of heavier crude oil slates, a U.S. official said that about half of the exports from Venezuela are moving to U.S. refiners.

A handful of U.S. delegates descended on Texas this week to showcase U.S. President Donald Trump's pro-fossil fuels strategies. Speaking from Houston on Tuesday, U.S. Energy Undersecretary Kyle Haustveit said that, seven months after U.S. military forces arrested former Venezuelan President Nicolas Maduro on drug charges, U.S. refiners are taking on about half of Venezuela's crude oil exports.

"In the last couple of months, we're seeing north of 500,000 barrels of approximately half of the production coming out of Venezuela is coming to the United States to the refineries that were built specifically for that crude," he was quoted by the Reuters news service as saying.

A separate report from Politico found that small U.S. producers were expected to sign up for deals with state-run Petroleos de Venezuela (PDVSA). Bloomberg was also reporting that upstream services firm SLB is getting into the mix.

Industrial Info Resources data find 11 plants tied to oil and gas production in Venezuela, and all of them are operational following disastrous twin earthquakes that rocked the nation in late June. Venezuela sits on the world's largest proven oil reserves, estimated at more than 300 billion barrels, or roughly 17% of global reserves. Readers can access plant details, including locations,capacities, employee counts, startup dates and associated projects by clicking here.

But it could require hundreds of billions of dollars and more than a decade of commitments to fully revive Venezuela's oil sector. Reporting from Reuters found Jovany Martinez, a vice president at PDVSA, said from Houston that he expected crude oil output to reach 1.25 million barrels per day (bpd) by the end of the month, up from OPEC-reported levels closer to 937,000 bpd last year. The nation, however, still needs supplies of diluent to help move the viscous Merey grade crude oil in Venezuela.

Early this year, Petropiar S.A., a Venezuelan joint venture in which Chevron holds a 30% stake, secured rights to develop parts of the Orinoco Belt, one of the richest oil deposits in the world. Apart from production, the joint venture operates an upgrader in Anzoategui, a state in northeast Venezuela, with an annual capacity of 200,000 bpd.

Upgraders break down heavier types of crude oil into a lighter stream known as synthetic crude.

By the Numbers

• 743,000 bpd from Venezuela puts the country in second place for U.S. imports
• 1.25 million bpd expected in production by the end of the month

Heavy Crude Limited by War

The emphasis on Venezuela comes as U.S. imports of heavy crude oil are limited by conflict in the Middle East. Exports from Iraq and Saudi Arabia are limited due to the fighting, forcing the U.S. to look to the Americas for more crude.

Federal data show the United States imported 743,000 bpd on average from Venezuela over the week ending August 7, compared to no barrels at all last year. That places Venezuela in the No. 2 spot, behind Canada with 4.4 million bpd.

On Monday, U.S. Energy Secretary Chris Wright met with refiners in Midland, Texas, to talk "about what we can do in the government to help them further ramp up their throughput," according to additional reporting from Reuters.

U.S. refiners, however, are running at about 96% of their peak capacity, according to federal data. Industrial Info Resources, meanwhile, has seen few maintenance issues, unplanned or otherwise, that would impact domestic supplies of refined petroleum products.

Higher gasoline prices stemming from the war are a vexing concern from a Republican administration fretting over its popularity in the runup to midterm elections in November. Trump's approval ratings are hovering in the low 30%, so addressing retail gasoline prices could be a way to court favor with the voting public.

Commodity prices, including gasoline, are largely a global issue, however. Global crude oil prices are up this week after Iran ruled out an extension to a memorandum of understanding with the United States on ending the war. That deal expired on Monday.

Retail gasoline prices as of Wednesday averaged $4.08 for a gallon of regular unleaded, AAA reported. That compares to $3.13 per gallon for this time last year.

Key Takeaways

• After arresting its president, the U.S. is now taking on half of Venezuela's crude oil output.
• It would still take some hefty commitments to overcome years of sector mismanagement.

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About Industrial Info Resources
Industrial Info Resources (IIR) is the leading provider of industrial market intelligence. Since 1983, IIR has provided comprehensive research, news and analysis on the industrial process, manufacturing and energy related industries. IIR's Global Market Intelligence (GMI) helps companies identify and pursue trends across multiple markets with access to real, qualified and validated plant and project opportunities. Across the world, Industrial Info Resources is tracking over 250,000 current and future projects worth $30.2 trillion (USD).