In the LOOP: US Gulf Coast crude exports to Venezuela resume

Two rare cargoes of US Gulf Coast crude could be making their way to Venezuela, according to S&P Global Platts fixtures reports.

Last week, Vitol was heard to have booked two Panamax-sized vessels to move crude from the USGC to Venezuela. Panamax vessels can carry roughly 500,000-800,000 barrels of crude oil. One of those vessels, the SCF Pacifica, was loaded in Houston over the weekend.

The other vessel reported, Skopelos, was also to be loaded November 25. However, that vessel was spotted off the coast of West Africa on Monday, according to Platts cFlow trade flow software.

The US has exported about 1 million barrels of crude to Venezuela during the past six weeks, according to S&P Global Platts Analytics and cFlow. None was transported during the weeks ending November 9 and November 16. For the weeks ending October 26 and November 2, the US sent 522,000 barrels and 534,000 barrels to Venezuela. No other US crude exports to Venezuela have occurred since 2003, according to US census data.

Crude being transported to Venezuela is likely WTI MEH, Light Louisiana Sweet or Domestic Light Sweet, a barrel blended to match the specifications of WTI Midland, according to market sources. The exported light sweet barrels could be sent for processing at the Isla refinery on the island of Curacao. PDVSA's national refining system has an overall capacity of 1.6 million b/d through five refineries: 645,000 b/d Amuay; 310,000 b/d Cardon; 187,000 b/d Puerto La Cruz; 140,000 b/d El Palito; 335,000 b/d Isla, and the 16,000 b/d Bajo Grande asphalt plant.

As much as 104,000 b/d of foreign light sweet crude could be directed to complete throughput at the Isla refinery, according to a production plan from Venezuela's state-owned PDVSA seen by S&P Global Platts. The light sweet crude would be run with Venezuelan heavy sour at the refinery. However, PDVSA was heard to have cut off crude supply to the refinery since May, when the US-based ConocoPhillips first tried to seize PDVSA assets in the Caribbean in connection with a debt dispute between the two companies. Light sweet US crude can also be blended with heavy sour Venezuelan crude, with the higher API gravity crude then sold as a blend in export markets for a higher price.

According to market sources, PDVSA could use the Isla refinery's production to meet payment commitments to debts owed to Russian and Chinese companies. The front-month spread between LLS and WTI MEH reached a three-month high November 20 of $2.15/b, before narrowing 45 cents/b to $1.70 November 21 and a further 85 cents/b to end Monday at 85 cents/b. As LLS' premium narrows, the grade becomes more competitive with WTI MEH for export to markets in Latin America. Since the start of November, LLS' premium to WTI MEH has fallen 95 cents/b.