PDVSA Refineries Look Towards Canadian Crude To Meet Demand

Caracas’ state-owned refineries in the United States have begun to inquire about importing oil from Canada instead of Venezuela due to the latter country’s oil production crisis, according to a new report by Bloomberg.

Citgo Petroleum, which operates refineries in Texas and Louisiana, recently made “quiet” inquiries to buy Canadian grades, sources close to the matter said.

Venezuela’s oil output fell to a 14-year low in July, causing the government to reroute oil shipments meant for Citgo to India and China instead, in order to avoid defaulting on international loans.

Like Venezuelan crude, Canadian oil is heavy and high in sulfur, making it a suitable alternative for Citgo’s usual crude diet. If the company, which is a subsidiary of Petroleos de Venezuela, makes a deal with Canadian suppliers, it would be the first time the Lake Charles, Louisiana, and Corpus Christi, Texas, refineries use oil from the Great White North.

Still, crude transport from Canada to the refineries near the Gulf of Mexico will remain an obstacle—as it has for decades.

Political tensions between Venezuelan President Nicolas Maduro’s regime and the White House have been on the rise in recent weeks. The Trump administration is considering additional sanctions on Venezuelan individuals close to the Maduro government, but will first try to enlist support from other countries. This is what unnamed sources close to the President told Bloomberg, adding that the new sanctions will target between 10 and 20 people and will consist of freezing their assets.

In addition to Maduro, U.S. sanctions are in place against 13 senior government officials, including a vice-president of state-owned oil company PDVSA. Sources from Washington say all options are on the table, including a suspension of U.S. oil exports to Venezuela as well as a ban on Venezuelan imports into the U.S., although the latter was highly improbable as it would create a problem for Gulf Coast refineries. Venezuela is the third-largest oil exporter to the United States.

By Zainab Calcuttawala for Oilprice.com

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