US imports of Venezuelan crude have fallen to near historic lows and
five Gulf Coast refineries now import nearly every barrel the imperiled
South American nation exports here, new US Energy Information
Administration data shows.
- Five refineries import most of Venezuelan crude sent to US
- Gulf Coast refiners lobbying against sanctions
- Refineries eye new imports from Canada, Africa, South America
But
as the Trump administration readies sanctions on Venezuela's oil
sector, these refineries have begun importing more crude from some
previously unexpected markets, including Chad, Colombia and Iraq, and
are working on contingency plans as a potential US embargo looms large,
analysts tell S&P Global Platts.
"All of these refiners, and the others that import Venezuelan crude, have actively developed plans in case sanctions are enacted," said John Auers, executive vice president of Turner, Mason & Company. "While they have all reduced Venezuelan imports, partly because less is available as production falls, they are still buying as economics dictate."
US refiners imported 438,000 b/d of Venezuelan crude in January, up about 1,000 b/d from December, a month which saw the lowest level of Venezuelan imports since January 2003 when a general strike effectively shut down Venezuela's oil sector. Venezuelan oil exports to the US sunk to 399,000 b/d in January 2003, but within four months US imports of Venezuelan crude fully recovered, climbing to 1.49 million b/d by May.
"All of these refiners, and the others that import Venezuelan crude, have actively developed plans in case sanctions are enacted," said John Auers, executive vice president of Turner, Mason & Company. "While they have all reduced Venezuelan imports, partly because less is available as production falls, they are still buying as economics dictate."
US refiners imported 438,000 b/d of Venezuelan crude in January, up about 1,000 b/d from December, a month which saw the lowest level of Venezuelan imports since January 2003 when a general strike effectively shut down Venezuela's oil sector. Venezuelan oil exports to the US sunk to 399,000 b/d in January 2003, but within four months US imports of Venezuelan crude fully recovered, climbing to 1.49 million b/d by May.
But a near-term recovery for Venezuela's current crude export market
appears highly unlikely as the country sinks further into an economic
crisis.
"I think Venezuelan production will continue to fall, so some decline in total exports can be expected," said Francisco Monaldi, the Latin American energy policy fellow at Rice University's Baker Institute for Public Policy. "Given that they have some repayment commitments in Asia that might lead to some additional decline in exports in the US, despite it being their best cash earner."
Venezuela's oil production averaged 1.57 million b/d in February, down 730,000 b/d from February 2016, according to a recent Platts survey.
FIVE REFINERIES
In January, five Gulf Coast refineries imported 92% of all Venezuelan crude sent to the US: Valero's Port Arthur and St. Charles refineries, Citgo's Lake Charles and Corpus Christi refineries, and Chevron's Pascagoula refinery.
Four of these refineries imported less or roughly the same amount of Venezuelan crude they imported a year ago, but Valero's St. Charles refinery, a Louisiana facility with a throughput capacity of 340,000 b/d, imported nearly 93,900 b/d of Venezuelan crude in January, a 37% increase from a year earlier.
Even with the threat of new US sanctions, Monaldi said he expects Chevron will continue to import Venezuelan crude since much of the crude being imported comes from their own projects in Venezuela.
"Similarly, Citgo should stay until the end and perhaps Valero can keep doing it, since the import ban is likely to be gradually implemented," he said.
Spokesmen for Citgo and Chevron declined to comment. A spokeswoman for Valero did not respond to requests for comment.
These refiners have been heavily lobbying the Trump administration against imposing sanctions on Venezuelan oil imports, analysts said.
"There has been a year-round effort, essentially, by Gulf Coast refiners to make sure the administration is aware the risks that cutting out Venezuelan supply will present to their businesses," said Kevin Book, a managing director with ClearView Energy Partners.
"Plan number one for these refiners is to try to prevent oil sanctions in the first place, and they continue to make their case to the White House," said Joe McMonigle, an analyst with Hedgeye Capital. "The backup plan is probably some much-needed refinery maintenance at first and then trying to source similar grades of crude from Canada and elsewhere, but with more difficult logistics."
These lobbying efforts have been successful, thus far, as the Trump administration has expressed caution over imposing any penalties which may negatively impact US refiners.
At the same time, Gulf Coast refiners have been diversifying their supplies, importing heavy crudes from new markets as Venezuelan supply dips and threats of new sanctions persist, new EIA data shows.
For example:
* Gulf Coast refiners imported nearly 448,000 b/d of Canadian crude in January, the first time that Canadian imports to the region outpaced Venezuelan imports.
* Citgo's Corpus Christi refinery imported more than 37,700 b/d of Ecuadorean crude in January, a 52% increase from January 2017.
* After not importing any crude from Chad since EIA began tracking in 2009, Citgo's Lake Charles refinery has imported an average of more than 23,600 b/d and Citgo's Corpus Christi facility has imported more than 19,000 b/d from the central African country since September.
* After importing Iraqi crude only sporadically since 2009, Valero's Port Arthur refinery imported nearly 16,100 b/d of Iraqi crude in December and then roughly doubled those imports to nearly 31,600 b/d in January.
* Citgo's Lake Charles refinery imported over 32,700 b/d of Colombia crude in January, only the second time it has imported Colombian crude since July 2015.
* Chevron's Pascagoula refinery imported nearly 17,000 b/d of Saudi crude in December, its first Saudi imports since October 2016.
* Gulf Coast imports of heavy sour crude have fallen from 2.31 million b/d in January 2017 to 1.85 million in January 2018.
SANCTIONS THREAT
While the Trump administration has held off sanctions on Venezuela's oil sector, on March 19 it banned the use of the Venezuela-issued digital currency known as the petro in an attempt to pressure the Maduro regime ahead of May's controversial presidential election.
Analysts claim that the ascendency of John Bolton, a Fox News analyst and former US ambassador to the UN, to Trump's national security advisor and the appointment of CIA Director Mike Pompeo to be the next US secretary of state increase the odds of new sanctions on Venezuelan crude exports.
McMonigle with Hedgeye Capital said Trump was still "actively considering" oil sanctions and will likely have a plan in place in time for the Summit of the Americas, a gathering in Peru which begins late next week and that Trump plans to attend.
Book with ClearView said that Trump will likely discuss this sanctions plan and try to drum up support from other regional allies and consumers of Venezuelan crude at the summit.
"Bottom line is that if the US is going into Venezuela sanctions knowing that they're going to be hurting US refiners they're going to want to hammer Caracas as hard as they can," Book said. "That means having a better coalition and a better coalition takes more time."
--Brian Scheid, brian.scheid@spglobal.com
--Edited by Kevin Saville, newsdesk@spglobal.com
"I think Venezuelan production will continue to fall, so some decline in total exports can be expected," said Francisco Monaldi, the Latin American energy policy fellow at Rice University's Baker Institute for Public Policy. "Given that they have some repayment commitments in Asia that might lead to some additional decline in exports in the US, despite it being their best cash earner."
Venezuela's oil production averaged 1.57 million b/d in February, down 730,000 b/d from February 2016, according to a recent Platts survey.
FIVE REFINERIES
In January, five Gulf Coast refineries imported 92% of all Venezuelan crude sent to the US: Valero's Port Arthur and St. Charles refineries, Citgo's Lake Charles and Corpus Christi refineries, and Chevron's Pascagoula refinery.
Four of these refineries imported less or roughly the same amount of Venezuelan crude they imported a year ago, but Valero's St. Charles refinery, a Louisiana facility with a throughput capacity of 340,000 b/d, imported nearly 93,900 b/d of Venezuelan crude in January, a 37% increase from a year earlier.
Even with the threat of new US sanctions, Monaldi said he expects Chevron will continue to import Venezuelan crude since much of the crude being imported comes from their own projects in Venezuela.
"Similarly, Citgo should stay until the end and perhaps Valero can keep doing it, since the import ban is likely to be gradually implemented," he said.
Spokesmen for Citgo and Chevron declined to comment. A spokeswoman for Valero did not respond to requests for comment.
These refiners have been heavily lobbying the Trump administration against imposing sanctions on Venezuelan oil imports, analysts said.
"There has been a year-round effort, essentially, by Gulf Coast refiners to make sure the administration is aware the risks that cutting out Venezuelan supply will present to their businesses," said Kevin Book, a managing director with ClearView Energy Partners.
"Plan number one for these refiners is to try to prevent oil sanctions in the first place, and they continue to make their case to the White House," said Joe McMonigle, an analyst with Hedgeye Capital. "The backup plan is probably some much-needed refinery maintenance at first and then trying to source similar grades of crude from Canada and elsewhere, but with more difficult logistics."
These lobbying efforts have been successful, thus far, as the Trump administration has expressed caution over imposing any penalties which may negatively impact US refiners.
At the same time, Gulf Coast refiners have been diversifying their supplies, importing heavy crudes from new markets as Venezuelan supply dips and threats of new sanctions persist, new EIA data shows.
For example:
* Gulf Coast refiners imported nearly 448,000 b/d of Canadian crude in January, the first time that Canadian imports to the region outpaced Venezuelan imports.
* Citgo's Corpus Christi refinery imported more than 37,700 b/d of Ecuadorean crude in January, a 52% increase from January 2017.
* After not importing any crude from Chad since EIA began tracking in 2009, Citgo's Lake Charles refinery has imported an average of more than 23,600 b/d and Citgo's Corpus Christi facility has imported more than 19,000 b/d from the central African country since September.
* After importing Iraqi crude only sporadically since 2009, Valero's Port Arthur refinery imported nearly 16,100 b/d of Iraqi crude in December and then roughly doubled those imports to nearly 31,600 b/d in January.
* Citgo's Lake Charles refinery imported over 32,700 b/d of Colombia crude in January, only the second time it has imported Colombian crude since July 2015.
* Chevron's Pascagoula refinery imported nearly 17,000 b/d of Saudi crude in December, its first Saudi imports since October 2016.
* Gulf Coast imports of heavy sour crude have fallen from 2.31 million b/d in January 2017 to 1.85 million in January 2018.
SANCTIONS THREAT
While the Trump administration has held off sanctions on Venezuela's oil sector, on March 19 it banned the use of the Venezuela-issued digital currency known as the petro in an attempt to pressure the Maduro regime ahead of May's controversial presidential election.
Analysts claim that the ascendency of John Bolton, a Fox News analyst and former US ambassador to the UN, to Trump's national security advisor and the appointment of CIA Director Mike Pompeo to be the next US secretary of state increase the odds of new sanctions on Venezuelan crude exports.
McMonigle with Hedgeye Capital said Trump was still "actively considering" oil sanctions and will likely have a plan in place in time for the Summit of the Americas, a gathering in Peru which begins late next week and that Trump plans to attend.
Book with ClearView said that Trump will likely discuss this sanctions plan and try to drum up support from other regional allies and consumers of Venezuelan crude at the summit.
"Bottom line is that if the US is going into Venezuela sanctions knowing that they're going to be hurting US refiners they're going to want to hammer Caracas as hard as they can," Book said. "That means having a better coalition and a better coalition takes more time."
--Brian Scheid, brian.scheid@spglobal.com
--Edited by Kevin Saville, newsdesk@spglobal.com
No comments:
Post a Comment