Looming US ban on MTBE exports to Venezuela expected to worsen gasoline shortage
By Brian Scheid, Ellie Valencia / Platts
Petroleumworld 02 13 2019
A US prohibition on exports of MTBE and other gasoline additives to Venezuela later this month is likely to exacerbate a gasoline shortage there, sources said Tuesday.
On January 28, the US imposed sanctions on PDVSA , Venezuela's state-run oil company, which included new restrictions on crude oil flows and an immediate ban on US diluent exports to Venezuela.
The sanctions included a series of general licenses, which permitted certain transactions with PDVSA and outlined when commercial dealings needed to be wound down.
Under one general license, Treasury required existing contracts, including shipments of transportation fuels and gasoline additives, to wind down by February 27.
This means that US exporters were immediately prohibited from entering into new contracts with PDVSA and that existing contracts to ship MTBE and potentially other additives used to boost octane in PDVSA-produced gasoline must be terminated by February 27, according to Jacob Dweck, a partner at Eversheds Sutherland, a law firm.
If a US shipment of MTBE or another high octane blending component, including reformate or alkylate, is not offloaded by February 27 it cannot be imported by PDVSA without violating sanctions, sources said.
"I think everyone is paralyzed by the sudden eruption of the Venezuela sanctions," said one source. "No one dares make a move until the situation becomes clear."
Gasoline in Venezuela, which is heavily subsidized, is currently being rationed and faces serious supply shortages outside of Caracas.
PDVSA supplies gasoline with 91 and 95 octanes, produced with the additions of MTBE and alkylate.
In 2018, PDVSA supplied the domestic market with about 96,000 b/d of 95 octane gasoline and 77,000 b/d of 91 octane, according to these preliminary figures.
The Paraguana Refining Center, the country's main producer of gasoline, supplied the domestic market with about 46,000 b/d of 95 octane and 37,000 b/d of 91 octane, while about 22,000 b/d of 95 octane and 31,000 b/d of 91 octane was imported, according to the preliminary figures.
As of Monday, the Paraguana Refining Center has inventories of 10,000 barrels of 91 octane and 15,000 barrels of 95 octane, while the Puerto La Cruz and El Palito refineries were not producing gasoline.
In 2018, Venezuela imported an average of 7,000 b/d of MTBE and 17,000 b/d of alkylate to boost the octane in its gasoline, according to preliminary PDVSA figures. India's Reliance has recently become the chief supplier of MTBE, but the US has also been a key source.
From January through November, the US exported nearly 1.23 million barrels of MTBE to Venezuela, about 10% of the total MTBE exported from the US over those 11 months, according to the latest data from the US Energy Information Administration.
MTBE is banned in several states throughout the US, making exports, particularly to Latin America, essential for producers.
S&P Global Platts assessed spot USG MTBE Tuesday at 162.73 cents/gal FOB USG. The assessment was based on an unchanged 1.17-cent discount to the FOB ARA marker and came above a bid seen in the Platts Market on Close assessment process.
Over the past week, the discount between the two markets has narrowed, as Gulf Coast pricing nears parity with Northwest Europe and surpasses the 160 cents/gal marker.
Typically, US Gulf Coast pricing is seen at a premium to the Northwest European market, with the differential seen as high as plus 10 cents earlier this year.
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Story by Brian Scheid, Ellie Valencia, Newsdesk-Venezuela; Edited by Richard Rubin from Platts / SPGlobal.
spglobal.com 02 13 2019
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