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First USGC WTI cargo delivered to Curacao at NYMEX WTI plus $3.96/b: sources

Houston — The first US crude oil cargo destined for the Caribbean region has arrived at Bullen Bay, Curacao and was priced at a $3.96/b premium to the NYMEX light sweet crude oil futures contract, on a delivered basis, according to sources familiar with the negotiations.

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The cargo was delivered to the Isla Refinery and bought through a Citgo affiliate named LDC, sources said. Citgo is a subsidiary of Venezuela's state-owned oil company PDVSA. A representative from Citgo was not immediately available for comment.

The netback from the delivered value of that WTI crude cargo would place the FOB value at WTI plus $3.12/b, according to sources and Platts calculations.

WEST TEXAS INTERMEDIATE REMAINS COMPETITIVE IN THE CARIBBEAN



Platts data suggests WTI is competitive in the Caribbean. Light Houston Sweet -- a proxy for Midland-grade WTI in Houston -- delivered into the Caribbean has held a near 40 cents/b discount to Nigerian Bonny Light over the past 30 days. So far this week, that arbitrage has widened to around $2.60/b.

Similarly, delivered LHS has held a 20 cents/b discount to Mexican Olmeca crude.

Both arbitrage calculations include a transportation cost of around $1.03/b, reflecting the Coatzacoalcos-St. Croix Aframax rate.

VENEZUELA CRUDE OUTPUT FALLS SHORT, FORCES IT TO IMPORT OIL

Venezuela has fallen short of the type of crude needed to meet the needs of its refineries for some time now and importing this cargo to the Isla refinery highlights that issue.

The Isla refinery has a capacity of 335,000 b/d. PDVSA has operated the Isla refinery, located 283 km north of the Venezuelan coast, since 1985 under a lease contract between the Venezuelan and Curacao governments. The lease has been renewed several times. The industrial services plant, called Curacao Refinery Utilities, is the property of the Curacao government.

In August, PDVSA made a decision to reactivate the lubricants complex at Isla. The complex's operations had been halted since early 2013 due to a lack of crude from Venezuela. It consists of four units: 4,200 mt/day high vacuum unit; a 1,000 mt/day propane de-asphalting unit; a 1,900 mt/day furfural extraction unit; and a 1,300 mt/day methyl ethyl ketone dewaxing unit.

Towards the end of 2015, PDVSA said Russia's Rosneft would provide Urals crude for use in the manufacturing of lubricants at Isla. That contract was for the purchase of 35,000-45,000 b/d of Urals blend, Jesus Luongo, PDVSA's vice president of refining, trade and supply, said in a statement at that time. In the previous three months, PDVSA had used an average 8,000 b/d of Urals crude, he said.

The purchase of crude from Russia, and now from the US, is necessary because Venezuelan production of this sort of crude is not sufficient to supply the Curacaoan refinery's process train, Luongo said then.

--Luciano Battistini, luciano.battistini@platts.com
--Mery Mogollon, mery.mogollon@platts.com
--Jhoan Cordoba, jhoan.cordoba@platts.com
--James Bambino, james.bambino@platts.com
--Edited by Keiron Greenhalgh, keiron.greenhalgh@platts.com