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| Caribbean-Latin America |
| Armada of Tankers with Venezuelan Oil Forms in U.S. Gulf |
| 2019-02-05 |
| Hat tip: gCaptain A flotilla loaded with about 7 million barrels of Venezuelan oil has formed in the Gulf of Mexico, some holding cargoes bought ahead of the latest U.S. sanctions on Venezuela and others whose buyers are weighing who to pay, according to traders, shippers and Refinitiv Eikon data. The Trump administration’s move to impose sanctions last week was meant to undercut support for Venezuelan President Nicolas Maduro by targeting the Latin American nation’s oil exports to the United States, the source of most of its foreign revenue. The sanctions aim to block U.S. refiners from paying into PDVSA accounts controlled by Maduro ‐ one reason numerous tankers are waiting in limbo off Venezuela with payments unclear. The United States buys 500,000 barrels of Venezuelan crude per day. U.S. customers of Venezuela’s state-run PDVSA are required by sanctions to deposit payments into escrow accounts that have not yet been set up. The funds will be controlled by Venezuelan congress head Juan Guaido, whom the United States, the European Union and much of Latin America recognize as the country’s leader. Neither the U.S. Treasury Department nor White House responded to requests for comment. There were over a dozen tankers this week anchored in Gulf of Mexico or outside of Venezuelan waters, according to the Refinitiv Eikon data, as shippers await payment and delivery directions from buyers. Traders said some of the cargoes were used as floating storage by buyers who took advantage of PDVSA’s open market sales ahead of sanctions. Others were held by trading firms struggling to find refiners willing to take the oil due to payment difficulties related to sanctions. For an interactive graphic on Venezuelan crude exports to the United States, see: https://tmsnrt.rs/2S4YIXB "There were many cargoes of Venezuelan crude already in the Gulf when sanctions were announced," said a trader who deals with PDVSA. Others are stuck because holders "cannot find who to sell them to due to sanctions," the trader said. The tankers had been chartered by regular U.S. buyers of Venezuelan oil, including Chevron Corp, PDVSA’s refining unit Citgo Petroleum and Valero Energy, and trading houses that sell to refiners. "Everybody is still working through the mechanics of things, still trying to figure out how freights are going to get paid and is sitting on the sidelines waiting for this to roll out," said one ship broker on Monday who was not authorized to speak publicly. Chevron and Valero declined to comment. Citgo did not respond to requests for comment. For an interactive graphic on Venezuelan crude exports to U.S. refiners, see: https://tmsnrt.rs/2t4ullS Separately, a few tankers that had waited for weeks to lift oil bound for U.S. customers left the Venezuelan port of Jose over the weekend without loading, according to Refinitiv data. The oil fleet in Gulf waters grew as a bottleneck earlier formed around Venezuelan ports by tankers awaiting authorization to load. PDVSA has said it will only sell to certain customers that prepay for cargoes. Outside of U.S. waters, there were also tankers loaded with Venezuelan crude and idling in the Caribbean and Europe, the Refinitiv data shows. |
| Posted by:Alaska Paul |
| #5 Each refinery is set up to handle a specific kind of crude oil, oil density and sulfur content are two big factors. If your refinery is set up for Venezuelan heavy sour you can't just plug in some Gulf Coast light sweet, for instance. Transportation costs also matter - it may make better sense to bring Venezuelan crude a short tanker trip to Lake Charles and route West Texas oil through a pipeline to a California refinery and tanker Alaskan crude to Korea. Oil companies have whole departments to figure out the best total package, and legal departments to see if it is allowed. |
| Posted by: Glenmore 2019-02-05 14:31 |
| #4 Chris, We are the major refiner of the crap crude Venezuela has. Only a couple other countries can, but not at our volume. In the 70s the refinery companies bet on oil getting scarcer and poured money into being able to refine heavy crude. With the shale boom, the refiners have started to convert some heavy refinery locations to sweet crude. The amazing thing is, the US actually produces so much good shale oil, which is ridiculously easy to refine, that our refineries can't keep up and we have to export a lot of it. So that is your basic answer. We can refine the heavy crude, can't refine all our shale crude so we import. That will change in the next decade and Venezuela, whatever their government situation, will be faced with a bunch of worthless crude that no one wants. |
| Posted by: DarthVader 2019-02-05 14:28 |
| #3 I would think that the type of crude required by certain US refineries at the present is part of the situation, chris. It is not easy to switch to different sources because of process variables. |
| Posted by: Alaska Paul 2019-02-05 14:26 |
| #2 We do refine crude oil shipped in from other places, chris. |
| Posted by: Mullah Richard 2019-02-05 14:17 |
| #1 i don't understand why we are importing oil when we are the biggest exporter now. Am I the only person this does not make sense too? |
| Posted by: chris 2019-02-05 13:59 |