Refiners elbow traders to take a larger slice of Venezuela's oil
SEATTLE (Oil Monster): Refiners and oil-producing firms in the U.S. and elsewhere are gaining market share in Venezuela's crude as they sign direct contracts with state-run PDVSA, challenging the global traders that inked earlier deals with the government of interim President Delcy Rodriguez.
Trading houses Vitol and Trafigura currently control the lion's share of Venezuela's oil exports through agreements signed in January with Caracas that are overseen by Washington, allowing them to take more than 100 million barrels for resale to final buyers in six months.
PDVSA, however, is slowly going back to the business model it had before U.S. energy sanctions were imposed on the OPEC country in 2019, which prioritizes supply contracts with its joint-venture partners and refineries over intermediaries.
The model could secure better prices for PDVSA in longer sale deals, sources involved in the negotiations said.
U.S. refiner Phillips 66 (PSX.N) in May began buying spot cargoes from PDVSA after a seven-year pause. In July, the company was allocated three cargoes of flagship Merey 16 heavy crude for delivery at the country's main oil port, Jose, shipping documents showed.
India's refiner Reliance Industries (RELI.NS) also began direct crude purchases from PDVSA in May, according to the documents, with those barrels now complementing cargoes bought from Vitol, Trafigura and Chevron (CVX.N) to secure volumes large enough to meet demand.
Valero Energy (VLO.N) and Thailand's Tipco Asphalt (TASCO.BK) are expected to begin direct purchases in the coming months, the sources said. But, as of mid-July, they had not been assigned loading windows yet, according to the documents.
The four companies had crude supply contracts with PDVSA until early 2019, when U.S. sanctions cut Venezuela's oil exports to the U.S., Europe and some Asian countries. The state company wants them to return to its pool of customers to diversify destinations and prices, while securing long-term pacts to allocate heavy grades that can be otherwise difficult to market, a company source said.
PDVSA, Venezuela's oil ministry, Chevron, Phillips 66, Valero and Reliance did not reply to requests for comment. Tipco said the company has not completed any purchases yet.
The U.S. Energy Department in May said Venezuela's overall oil sales were representing $2 billion to $3 billion per month, with about half of the volume bound for the U.S. The department has listed units of TotalEnergies (TTEF.PA), Aramco, Chevron, Citgo Petroleum, Exxon Mobil (XOM.N), Marathon Petroleum (MPC.N), Pemex, PBF Energy (PBF.N), Phillips 66, Trafigura, Valero and Vitol as importers in the U.S. this year, without elaborating on sale terms.
Courtesy: www.reuters.com