If the U.S. bans oil imports from Venezuela, Valero Energy Corp. and Chevron Corp. may end up paying the price.
The U.S. is considering a ban on oil imports from Venezuela and exports of petroleum products, but is wary of the damage to American companies, Secretary of State Rex Tillerson said Sunday. In addition to exporting oil to America, Venezuela’s state-controlled oil company Petroleos de Venezuela SA also exports jet fuel to the U.S., and imports Permian oil and diluent naphtha used to help Venezuelan oil transported by pipeline.
Valero is the biggest buyer of Venezuelan oil, importing 207,800 barrels a day in November for its refineries in Texas and Louisiana. Chevron was the second-largest buyer. State-owned PDVSA’s U.S. refining arm Citgo Petroleum Corp. has been receiving less and less oil from its holding company as output slumps.
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“Although production is declining, refinery utilization is down in Venezuela and so it’s kind of keeping exports available to us,” Gary Simmons, Valero’s vice president of supply, said Feb. 1 on the company’s fourth-quarter earnings call.
Back when shale oil wasn’t even on the map, refiners from Texas to Mississippi invested billions in equipment to process cheap, heavy oil from countries like Venezuela, Ecuador and Colombia. Just as Venezuela became dependent on demand from the U.S. Gulf Coast, home to one of the world’s largest clusters of refineries, American fuel makers grew to rely more on Venezuelan crude. It’s now the second-largest supplier of crude to Gulf Coast plants, after Mexico.
