By Nicole Jao, Shariq Khan, Marianna Parraga and Arathy Somasekhar
NEW YORK (Reuters) – Valero Energy is planning to purchase up to 6.5 million barrels of Venezuelan crude oil in March for its Gulf Coast refineries. This move positions Valero as the leading foreign refiner of oil from Venezuela since the U.S. took control of President Nicolas Maduro in January, sources indicated.
Valero was one of the first U.S. refiners to restart imports of Venezuelan crude after the U.S. made a significant $2 billion oil supply deal with the interim government of Venezuela and began easing sanctions. If Valero manages to acquire 10 or more shipments next month, which is about 210,000 barrels per day, it could overtake Chevron as the top U.S. refiner of Venezuelan crude.
This would mark the highest amount of Venezuelan crude oil Valero has processed since the U.S. imposed sanctions on the country’s oil industry back in January 2019.
Chevron, the only major U.S. company producing oil in Venezuela, is expected to increase its exports of Venezuelan crude to around 300,000 barrels per day in March, up from 220,000 barrels per day in January, according to sources. Chevron usually refines about half of those exports at its own facilities and sells the remaining oil to other U.S. refiners.
A significant portion of Chevron's Venezuelan oil sales to U.S. refiners typically goes to Valero. In March, it is expected that Chevron will supply Valero with most of the volume it plans to import, as indicated by six sources.
Valero has also secured some shipments from trading firms, including Trafigura, which were among the first companies approved by the U.S. government last month to trade Venezuelan oil.
Separately, Vitol has scheduled three shipments of naphtha to be delivered to Venezuela's state oil company PDVSA between February 22 and March 3, based on a shipping plan obtained by Reuters.
However, sources warned that loading schedules are not yet finalized and may still change. They spoke anonymously due to the confidential nature of the information.
Vitol and Trafigura did not provide comments when contacted. Chevron and PDVSA also did not respond immediately.
A spokesperson for Valero referred to remarks made by executive Randy Hawkins after the company's fourth-quarter earnings report on January 29. Hawkins confirmed that Valero was in discussions with authorized Venezuelan crude sellers and anticipated that such purchases would constitute a "significant portion" of its heavy crude acquisitions in February and March.
Valero, which has the second-largest refining network in the U.S. capable of processing Venezuelan heavy oil, had an ongoing agreement to buy crude from PDVSA before the U.S. sanctions were imposed.
Before a recent expansion of its 435,000-barrel-per-day refinery in Port Arthur, Texas, Valero’s refining capacity specifically for Venezuelan crude was around 240,000 barrels per day. The company now expects to process a larger volume of Venezuelan oil, Hawkins stated.
U.S. Secretary of Energy Chris Wright stated this week in Caracas that Venezuela's oil production and exports are projected to experience a "dramatic increase" in the coming months. The country's oil output reached 1 million barrels per day this month after production cuts were lifted, with January exports reaching about 800,000 barrels per day.
According to Wright, oil sales from Venezuela under U.S. control have totaled $1 billion since Maduro's capture, and an additional $5 billion is expected to be allocated into a U.S.-controlled fund in the following months.
Since January, the U.S. has been issuing general licenses that authorize oil exports, fuel supplies to Venezuela, delivery of equipment for oil and gas production, oilfield expansions, and new investments.
Valero is considering purchasing oil directly from PDVSA under the new authorizations, which could further increase volumes, as noted by three sources.
However, PDVSA is currently reluctant to sell to companies without individual U.S. licenses due to ongoing uncertainties about what is allowed and what restrictions remain, sources shared with Reuters.