Released June 21, 2022 | SUGAR LAND
en
June 21, 2022--Written by Pietro D. Pitts for Industrial Info Resources (Sugar Land, Texas)--Cash-strapped, state-owned Petroleos de Venezuela (PDVSA) looks to benefit from the war in Ukraine, which has boosted demand for its oil while increasing commodity prices. The combination of higher oil demand and prices will boost Venezuela's petroleum revenues and could allow PDVSA to achieve some modest production gains and even higher exports.
Venezuela's oil production in mid-January 2022 sat just below 800,000 barrels per day (BBL/d), according to PDVSA production reports seen by Industrial Info. Caracas-based Ecoanalitica expects Venezuela's production to average 830,000 BBL/d in 2022 under a status quo scenario with an average oil price of US$71.52 per barrel, the consultancy revealed in a March 2022 report to clients. Under the scenario, Venezuela's petroleum revenues could reach US$22 billion in 2022, compared with US$7 billion in 2021, when average production was 635,250 BBL/d and the average oil price was just US$30.66 per barrel.
Ecoanalitica's moderate and optimistic scenarios in 2022 point to an average production potential of 984,000 BBL/d and 1,211,580 BBL/d, respectively. Using an average oil price of US$71.52 per barrel, Venezuela's petroleum revenues could reach US$26 billion and US$32 billion, respectively, the consultancy wrote.
Export Destinations
Prior to the war in Ukraine, China's demand for Venezuelan barrels was robust despite U.S. sanctions imposed on Venezuela in early 2019, which were aimed at toppling Venezuela's leader Nicolas Maduro. Venezuela's outstanding loans to China of nearly US$18 billion to US$19 billion were tied to oil-for-loan deals engineered under the leadership of late Venezuelan President Hugo Chavez.
Recent rises in Venezuelan oil exports to Asia--primarily China and Malaysia--is being driven by demand for Venezuelan barrels amid continued Russian-led aggression in Ukraine and consequent U.S. sanctions on Russian oil and gas.
Venezuela's total crude oil exports in April 2022 were up sequentially compared with the prior month as well as the same month last year, while flows between January and April 2022 followed a similar trend compared with the same four-month period a year ago.
Venezuela's oil exports that reached final destinations in April 2022 averaged 405,162 BBL/d, up 77% compared with March 2022, and up 355% compared to April 2021, marking only the sixth time since 2020 that exports surpassed the 400,000-BBL/d mark, according to data from Refinitiv waterborne flows for the 2020-22 timeframe. Arrivals yet to reach their ports were not included in the calculations.
During the 28-month study period, Venezuelan oil exports peaked in March 2020 at 951,046 BBL/d and found a floor in November 2021 at 47,723 BBL/d, the data shows, reflecting the start of the pandemic and then recovery that started about a year later.
Between January and April 2022, Venezuelan oil exports averaged 264,526 BBL/d, up 106% compared to the same four-month period in 2021, when they averaged 128,510 BBL/d. Exports in the same four-month period in 2000 averaged 705,825 BBL/d.
Despite positive factors boosting demand for Venezuelan barrels, the export figures have recently been negatively impacted by buyers refusing to take cargoes due to quality issues, according to recent reports from Reuters.
Demand For Venezuelan Grades
Buyers of Venezuelan barrels in Asia from China to Malaysia and even in the Caribbean from Cuba to Saint Lucia continue to prefer the Merey grade, followed by the Hamaca grade and then the diluted crude oil (DCO) grade. Demand for the Venezuelan barrels remains strong but at a steep discount due to sanctions.
Venezuela's Merey, especially Merey-16, is a heavy and high-sulfur blended oil traditionally composed of PDVSA's high-quality Mesa-30 (30%) and extra-heavy oil (70%), according to PDVSA. The Hamaca is a medium-gravity sour synthetic crude similar in quality to Ecuador's Oriente, while the DCO is the result of mixing heavy oil (70%) with naphtha (30%).
China remains the largest destination for Venezuelan oil exports, according to Refinitiv. In the first four months of 2022, an average of 108,411 BBL/d of Venezuelan oil reached Chinese ports via 12 cargoes comprising seven carrying Merey, two carrying Hamaca, and then one each carrying oil products--basic crude oil and Leona 22.
Malaysia was the second-largest Asian destination for Venezuelan oil exports. An average of 65,509 BBL/d of Venezuelan oil reached Malaysian ports via five cargoes and all carrying Merey. As part of Venezuela's actions to evade U.S. sanctions, a large number of barrels sent to Malaysia and other destinations are later redirected to China, complicating the tracking process.
Closer to home, long-time Venezuela political and ideological ally Cuba received an average of 14,412 BBL/d in the first four months of 2022 in five cargoes, of which four were Merey and one just labeled as crude oil. Other Caribbean countries to import Venezuela oil included Saint Lucia, which imported two cargoes of DCO, and Bonaire, which imported one cargo of Merey.
Venezuelan Imports
Venezuela is home to six refineries owned by PDVSA, with a processing capacity of 1.3 million BBL/d. However, lackluster maintenance, a lack of equipment, electric issues and cannibalization of parts have pushed utilization rates into the 20-30% range, according to details from Venezuelan oil sector experts.
Refinery limitations have led to a scarcity of naphtha, essential to upgrade Venezuela's heavy oils, and forced PDVSA to revert to importing light oils from abroad as well as Iranian condensate to be used as a diluent. However, PDVSA's upgraders, which convert heavy oil into a lighter synthetic oil or syncrude, face headwinds similar to the refineries but still contend with foreign partners such as Chevron Corporation (NYSE:CVX) (San Ramon, California), which remains in the country albeit in an U.S.-stipulated "wind-down" mode.
Between February 18 and April 8, 2022, Venezuela imported four shipments from its Middle Eastern ally Iran, carrying a total of 4,336,997 barrels of condensate, according to Refinitiv. Amid ongoing discussions between the U.S. and Iran regarding a nuclear deal, Washington has allowed bilateral trade of Iranian condensate and Venezuelan oil to continue, at least for now.
Industrial Info Resources (IIR) is the world's leading provider of market intelligence across the upstream, midstream and downstream energy markets and all other major industrial markets. IIR's Global Market Intelligence Platform (GMI) supports our end-users across their core businesses, and helps them connect trends across multiple markets with access to real, qualified and validated project opportunities. Follow IIR on: LinkedIn.
Venezuela's oil production in mid-January 2022 sat just below 800,000 barrels per day (BBL/d), according to PDVSA production reports seen by Industrial Info. Caracas-based Ecoanalitica expects Venezuela's production to average 830,000 BBL/d in 2022 under a status quo scenario with an average oil price of US$71.52 per barrel, the consultancy revealed in a March 2022 report to clients. Under the scenario, Venezuela's petroleum revenues could reach US$22 billion in 2022, compared with US$7 billion in 2021, when average production was 635,250 BBL/d and the average oil price was just US$30.66 per barrel.
Ecoanalitica's moderate and optimistic scenarios in 2022 point to an average production potential of 984,000 BBL/d and 1,211,580 BBL/d, respectively. Using an average oil price of US$71.52 per barrel, Venezuela's petroleum revenues could reach US$26 billion and US$32 billion, respectively, the consultancy wrote.
Export Destinations
Prior to the war in Ukraine, China's demand for Venezuelan barrels was robust despite U.S. sanctions imposed on Venezuela in early 2019, which were aimed at toppling Venezuela's leader Nicolas Maduro. Venezuela's outstanding loans to China of nearly US$18 billion to US$19 billion were tied to oil-for-loan deals engineered under the leadership of late Venezuelan President Hugo Chavez.
Recent rises in Venezuelan oil exports to Asia--primarily China and Malaysia--is being driven by demand for Venezuelan barrels amid continued Russian-led aggression in Ukraine and consequent U.S. sanctions on Russian oil and gas.
Venezuela's total crude oil exports in April 2022 were up sequentially compared with the prior month as well as the same month last year, while flows between January and April 2022 followed a similar trend compared with the same four-month period a year ago.
Venezuela's oil exports that reached final destinations in April 2022 averaged 405,162 BBL/d, up 77% compared with March 2022, and up 355% compared to April 2021, marking only the sixth time since 2020 that exports surpassed the 400,000-BBL/d mark, according to data from Refinitiv waterborne flows for the 2020-22 timeframe. Arrivals yet to reach their ports were not included in the calculations.
During the 28-month study period, Venezuelan oil exports peaked in March 2020 at 951,046 BBL/d and found a floor in November 2021 at 47,723 BBL/d, the data shows, reflecting the start of the pandemic and then recovery that started about a year later.
Between January and April 2022, Venezuelan oil exports averaged 264,526 BBL/d, up 106% compared to the same four-month period in 2021, when they averaged 128,510 BBL/d. Exports in the same four-month period in 2000 averaged 705,825 BBL/d.
Despite positive factors boosting demand for Venezuelan barrels, the export figures have recently been negatively impacted by buyers refusing to take cargoes due to quality issues, according to recent reports from Reuters.
Demand For Venezuelan Grades
Buyers of Venezuelan barrels in Asia from China to Malaysia and even in the Caribbean from Cuba to Saint Lucia continue to prefer the Merey grade, followed by the Hamaca grade and then the diluted crude oil (DCO) grade. Demand for the Venezuelan barrels remains strong but at a steep discount due to sanctions.
Venezuela's Merey, especially Merey-16, is a heavy and high-sulfur blended oil traditionally composed of PDVSA's high-quality Mesa-30 (30%) and extra-heavy oil (70%), according to PDVSA. The Hamaca is a medium-gravity sour synthetic crude similar in quality to Ecuador's Oriente, while the DCO is the result of mixing heavy oil (70%) with naphtha (30%).
China remains the largest destination for Venezuelan oil exports, according to Refinitiv. In the first four months of 2022, an average of 108,411 BBL/d of Venezuelan oil reached Chinese ports via 12 cargoes comprising seven carrying Merey, two carrying Hamaca, and then one each carrying oil products--basic crude oil and Leona 22.
Malaysia was the second-largest Asian destination for Venezuelan oil exports. An average of 65,509 BBL/d of Venezuelan oil reached Malaysian ports via five cargoes and all carrying Merey. As part of Venezuela's actions to evade U.S. sanctions, a large number of barrels sent to Malaysia and other destinations are later redirected to China, complicating the tracking process.
Closer to home, long-time Venezuela political and ideological ally Cuba received an average of 14,412 BBL/d in the first four months of 2022 in five cargoes, of which four were Merey and one just labeled as crude oil. Other Caribbean countries to import Venezuela oil included Saint Lucia, which imported two cargoes of DCO, and Bonaire, which imported one cargo of Merey.
Venezuelan Imports
Venezuela is home to six refineries owned by PDVSA, with a processing capacity of 1.3 million BBL/d. However, lackluster maintenance, a lack of equipment, electric issues and cannibalization of parts have pushed utilization rates into the 20-30% range, according to details from Venezuelan oil sector experts.
Refinery limitations have led to a scarcity of naphtha, essential to upgrade Venezuela's heavy oils, and forced PDVSA to revert to importing light oils from abroad as well as Iranian condensate to be used as a diluent. However, PDVSA's upgraders, which convert heavy oil into a lighter synthetic oil or syncrude, face headwinds similar to the refineries but still contend with foreign partners such as Chevron Corporation (NYSE:CVX) (San Ramon, California), which remains in the country albeit in an U.S.-stipulated "wind-down" mode.
Between February 18 and April 8, 2022, Venezuela imported four shipments from its Middle Eastern ally Iran, carrying a total of 4,336,997 barrels of condensate, according to Refinitiv. Amid ongoing discussions between the U.S. and Iran regarding a nuclear deal, Washington has allowed bilateral trade of Iranian condensate and Venezuelan oil to continue, at least for now.
Industrial Info Resources (IIR) is the world's leading provider of market intelligence across the upstream, midstream and downstream energy markets and all other major industrial markets. IIR's Global Market Intelligence Platform (GMI) supports our end-users across their core businesses, and helps them connect trends across multiple markets with access to real, qualified and validated project opportunities. Follow IIR on: LinkedIn.
