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Potential U.S. oil sanctions to Venezuela could hit Texas refiners hardest

Michelle Gustafson/Bloomberg

U.S. weighs banning oil imports from Venezuela: Tillerson. Valero, Chevron among refiners that have most to lose.

By Lucia Kassai

Petroleumworld 02 06 2018

If the U.S. bans oil imports from Venezuela, Valero Energy Corp. and Chevron Corp. may end up paying the price.

The U.S. is considering a ban on oil imports from Venezuela and exports of petroleum products, but is wary of the damage to American companies, Secretary of State Rex Tillerson said Sunday. In addition to exporting oil to America, Venezuela's state-controlled oil company Petroleos de Venezuela SA also exports jet fuel to the U.S., and imports Permian oil and diluent naphtha used to help Venezuelan oil transported by pipeline.

Venezuela Addiction

Top U.S. importers of Venezuelan crude oil in NovemberValero 207.8 Chevron 90.8 Citgo 63.6 Marathon 41.2 Phillips 18.3 Motiva 16.7 Lyondell 16.5

Source: EIA's Company Level Import data compiled by Bloomberg

Valero is the biggest buyer of Venezuelan oil, importing 207,800 barrels a day in November for its refineries in Texas and Louisiana. Chevron was the second-largest buyer. State-owned PDVSA's U.S. refining arm Citgo Petroleum Corp. has been receiving less and less oil from its holding company as output slumps.

“Although production is declining, refinery utilization is down in Venezuela and so it's kind of keeping exports available to us,” Gary Simmons, Valero's vice president of supply, said Feb. 1 on the company's fourth-quarter earnings call. Valero spokeswoman Lillian Riojas didn't immediately return a request for additional comments.

America's Dependence

Largest suppliers of foreign oil to U.S. Gulf refiners in November

Mexico 705.0 Venezuela 491.0 Iraq 474.0 S.Arabia 454.0 Canada 348.0

Source: EIA

Back when shale oil wasn't even on the map, refiners from Texas to Mississippi invested billions in equipment to process cheap, heavy oil from countries like Venezuela, Ecuador and Colombia. Just as Venezuela became dependent on demand from the U.S. Gulf Coast, home to one of the world's largest clusters of refineries, American fuel makers grew to rely more on Venezuelan crude. It's now the second-largest supplier of crude to Gulf Coast plants, after Mexico.

Story by Lucia Kassai from Bloomberg.

bloomberg.com / 02 05 2018

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