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Petroleum

Venezuela Continues to Seek Heating Oil Role Amid Looming US Shortages

Strategic Insights

— 1 min read

Venezuela's efforts to play a role in the US heating oil market are ongoing despite initial rejections from the US government. Venezuelan state oil company Petroleos de Venezuela (PDV) is optimizing refineries to produce additional heating oil, with the potential to have 30,000 barrels per day ready within 15 days. This is part of a larger offer of 183,000 barrels per day, with the remaining 153,000 barrels per day to be provided by US retail unit Citgo, pending a waiver from the Jones Act. Venezuelan officials plan to meet with US lawmakers, consumers, and government officials to explore possible solutions to the heating oil situation in the Northeast.

Key Takeaways:

  • Venezuela is continuing its efforts to provide heating oil to the US despite initial rejections from the US government.
  • PDV is optimizing refineries to produce an additional 30,000 barrels per day of heating oil, which can be ready within 15 days.
  • The 30,000 barrels per day is part of a larger offer of 183,000 barrels per day, with the remaining 153,000 barrels per day to be provided by Citgo, pending a waiver from the Jones Act.
  • Venezuelan officials have requested a waiver from the Jones Act, which increases shipping costs by a factor of 2.5, to allow Citgo to transport the oil from the Gulf Coast to Amerada Hess' storage facilities in the Northeast.
  • The Venezuelan government is considering enacting fiscal reforms to make investment in the downstream more attractive for both foreigners and PDV.
  • PDV is already making significant investments in refinery upgrades, including a $500 million financing arrangement with the Japanese Bank for International Cooperation to upgrade the Puerto la Cruz refinery.
  • PDV is also considering building a new refinery if the margins prove adequate.

Statistics:

  • 30,000 barrels per day: the potential increase in heating oil production from PDV's refineries within 15 days.
  • 183,000 barrels per day: the total amount of heating oil that Venezuela is offering the US.
  • 153,000 barrels per day: the amount of heating oil that was to be provided by Citgo, pending a waiver from the Jones Act.
  • 2.5: the factor by which the Jones Act increases shipping costs.
  • $500 million: the value of the financing arrangement between PDV and the Japanese Bank for International Cooperation to upgrade the Puerto la Cruz refinery.

Sources:

  • "Oil Daily" (21 September), page 1.
  • "Oil Daily" (6 September), page 2.

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