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Venezuelan crude shipments to USGC fall 30% year on year

Houston — US Gulf Coast imports of Venezuelan crude have fallen nearly 30% in ayear, as production from that country has decreased to a near 30-year low, S&PGlobal Platts Analytics and US Customs data showed Wednesday. Year on year, USGC buyers imported 6.17 million fewer barrels in January2018 than in January 2017 with January 2018 imports totaling about 14.714million barrels, the data showed. Compared with the average monthly amountimported in the second half of 2017 of 16.455 million barrels, January 2018'simports fell about 1.741 million barrels.

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Venezuela's oil production has fallen for six straight months, decreasinga further 60,000 b/d in January to 1.64 million b/d. Production this low hasnot been seen since June 1988, not counting strike-affected months, accordingto S&P Global Platts OPEC survey archives.

DCO IMPORTS DOWN

Of the Venezuelan crudes exported to the USGC, heavy sour grades Hamaca,Zuata, Morichal and Merey are brought in the most. Diluted crude oil (DCO), ablend of heavy sour crude often cut with naphtha, is also shipped frequentlyto the region.

USGC January imports of Zuata crude fell by about 180,940 barrelscompared with the H2 2017 average to 541,126 barrels. Zuata has an average APIgravity of 15.7 degrees and typical sulfur content of 2.69%.

Imports of Hamaca crude, which has a typical API gravity of 20 degreesand 2.32% sulfur content, also decreased compared with the H2 2017 average. InJanuary, USGC buyers imported about 960,000 fewer barrels of the grade than inthe months of H2.

Compared with the average for the last six months of 2017, Januaryimports of DCO crude fell by nearly 2.216 million barrels to 1.6 millionbarrels. Merey crude imports also saw a falloff, with January volumes of951,785 barrels about 385,180 barrels lower than the average H2 import level.Merey crude has an average API gravity of 15.84 degrees and typical sulfurcontent of 2.49%.

Meanwhile, January imports of Morichal crude were about 1.417 millionbarrels higher than the H2 2017 average. About 3 million barrels of the grade,which has an average API gravity of 12.2 degrees and 2.78% sulfur content,were imported in January.

FILLING THE SUPPLY GAP As Venezuelan crude imports have declined during the past year, the USGChas seen increasing volumes of heavy sour grades such as Iraqi Basrah Heavy,Colombian Castilla Blend, Mexican Maya, Saudi Arab Medium and Arab Heavy, aswell as Western Canadian Select.

The largest increase in imported barrels has come from Colombia'sCastilla Blend crude, with January shipments totaling about 6.237 millionbarrels. This represents an increase of 2.321 million barrels compared withthe H2 2017 average.

In January, shipments of Maya crude to the USGC increased 1.225 millionbarrels compared with the H2 2017 average to 16.443 million barrels. PMI, thetrading arm of state-owned oil company Pemex, recently decreased the K factorfor March shipments of Maya to the USGC by 25 cents/b to minus $2.30/b in abid to make the crude more competitive with other heavy sour grades.

Despite Saudi Arabia's vow to decrease overall shipments of its crude tothe US, January imports reached 7.159 million barrels. This represents anincrease of 1.659 million barrels over the H2 2017 average. Saudi Aramcolowered the official selling prices for March shipments of US-bound ArabMedium and Arab Heavy by 10 cents/b each.

Imports of Iraqi Basrah Heavy are up by about 596,000 barrels over H22017 levels, with USGC buyers having brought in 5.564 million barrels inJanuary. For February volumes, Iraq's SOMO cut the February OSP for US-boundshipments of Basrah Heavy by 20 cents/b.

--Mary Hogan, mary.hogan@spglobal.com

--Edited by Richard Rubin, richard.rubin@spglobal.com