By Nicole Jao, Shariq Khan, Marianna Parraga and Arathy Somasekhar
NEW YORK, Feb 13 (Reuters) – Valero Energy is set to buy up to 6.5 million barrels of Venezuelan crude in March bound for its Gulf Coast refineries, making it the top foreign refiner of the OPEC country’s oil since the United States captured President Nicolas Maduro in January, sources said on Friday.
Valero was among the first U.S. refiners to resume imports of Venezuelan crude after the United States struck a flagship $2 billion oil supply deal with the country’s interim government and began to ease sanctions. If Valero succeeds in snapping up 10 or more cargoes next month, equivalent to around 210,000 barrels per day, it could surpass U.S. oil major Chevron as the top U.S. refiner of Venezuelan crude.
That would also be the most Venezuelan crude oil Valero would process since the United States first sanctioned the country’s oil industry in January 2019.
Chevron, the only U.S. major producing oil in Venezuela, is expected to boost exports of Venezuelan crude to some 300,000 bpd in March, from 220,000 bpd in January, sources told Reuters last month. Chevron typically refines up to half of those exports at its own refineries, and sells the rest to other U.S. refiners.
A large portion of Chevron’s sales of Venezuelan oil to U.S. refiners typically goes to Valero. In March, Chevron is expected to supply Valero with most of the volume the refiner is planning to import, six sources said.
Valero has also negotiated some cargoes from trading houses including Trafigura, which were the first companies authorized by the U.S. government last month to join Chevron in trading Venezuelan oil.
Vitol has separately scheduled three naphtha cargoes to be delivered to Venezuela’s state company PDVSA between February 22 and March 3, according to a shipping plan seen by Reuters.
The sources cautioned that loading schedules have not been finalized and are still subject to revision. They spoke on condition of anonymity to discuss confidential information.
Vitol and Trafigura declined to comment. Chevron and PDVSA did not immediately respond to requests for comment.
A Valero spokesperson referred to comments made by executive Randy Hawkins after its fourth-quarter earnings release on January 29. In those comments, Hawkins confirmed Valero was in talks with authorized sellers of Venezuelan crude and expected it to make up a “pretty large part” of its heavy-crude purchases in February and March.
Valero, which has the second-largest U.S. refining network capable of processing Venezuelan heavy oil, had a long-term supply agreement to buy crude from PDVSA before U.S. sanctions.
Valero’s total refining capacity for Venezuelan crude oil was around 240,000 bpd before an expansion at its 435,000-bpd refinery in Port Arthur, Texas, in 2023. The company now expects to be able to process a much larger volume of Venezuelan oil, Hawkins said.
VENEZUELA EXPORTS RAMP UP
Venezuela’s oil production and exports are expected to have a “dramatic increase” in the coming months, U.S. Secretary of Energy Chris Wright said in Caracas this week. The country’s output reached 1 million bpd this month after production cuts were reversed, while exports bounced to some 800,000 bpd in January.
Oil sales from Venezuela under U.S. control have totaled $1 billion since Maduro’s capture and another $5 billion is expected to go into a U.S.-controlled fund in the next months, Wright told NBC News on Thursday.
The United States has been issuing general licenses since January authorizing oil exports, fuel supplies to Venezuela, provision of equipment for oil and gas production, oilfield expansions and new investments.
Valero has been considering buying oil directly from PDVSA under the new authorizations, which could help expand volumes further, according to three sources.
PDVSA, however, is so far refusing to sell to companies without individual U.S. licenses as questions remain on what is permitted and what is off-limits, sources told Reuters.
(Reporting by Nicole Jao and Shariq Khan in New York, Marianna Parraga and Arathy Somasekhar in Houston; Editing by Will Dunham)
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