Page 5 - FSUOGM Week 21 2022

FSUOGM COMMENTARY FSUOGM

Or at least, to give those involved the benefit of substantially unless PdVSA secures supplies of
the doubt, it is not bothering to communicate its several different types of goods and services.
understanding and intentions very clearly. It needs parts and equipment to repair its pro-
One of the more interesting statements duction and processing complexes, as well as
made by Bloomberg source last week was that its pipelines and ports, and it also needs experts
Washington was taking this step partly because and technicians to help carry out these repairs,
it wanted Eni and Repsol, the only two foreign which have been neglected for several years. The
companies still operating in Venezuela, to be NOC also needs more gas condensate and other
able to deliver more crude to the European blendstocks so that it can combine its own extra-
market. With that barrier lifted, the source said, heavy crude oil output to make a lighter syn-
Europe should have an easier time covering thetic fuel that is of more interest to customers.
demand and overcoming the supply disrup- On that note, it’s worth remembering that
tions resulting from the interruptions in Russian PdVSA has historically not sold much oil in
crude deliveries, he said. Europe. The company doesn’t have a huge cus-
According to Bloomberg’s report, this assis- tomer base in the European market, mostly
tance for Europe may come at the expense of because its offerings are not much in demand
other parties. One of the multiple sources cited among refiners in Europe.
by the news agency said that Eni and Repsol This is true for both its heavy/extra-heavy
were working with US authorities to divert car- crudes and its lighter blended synthcrudes;
goes of Venezuelan crude heading for China to many European refiners would rather have
the European market. light sweet crudes from the North Sea or West
Africa or medium sours from the Middle East or
What can Venezuela do? Russia than heavier, tar-like grades from South
It’s not clear how much impact such moves America.
are expected to have – or, indeed, what kind of
impact. Shifting global trade flows
Prior to the invasion of Ukraine in late Febru- As such, even if the US government were to
ary, European countries were importing around remove the threat of sanctions penalties from
2.3mn barrels per day of crude from Russia, and Eni and Repsol, those two companies would not
delivery volumes were reported to be down by necessarily find that European refiners would be
about 20% as of mid-April. That would put them eager to buy Venezuelan crude to make up for
at around 1.84mn bpd – and that’s a figure that their loss of access to Russian feedstock.
Venezuela cannot match any time soon. They might very well find, though, that US
The South American country is currently Gulf Coast (USGC) refiners would be happy to
producing about 700,000 bpd and has to keep buy as much of their Venezuelan oil as possible,
some of these barrels back for its own use, provided that they were not penalised for doing
and it won’t be in any position to boost output so under the sanctions regime.

(Image from European Petroleum Industry Association (EUROPIA) White Paper on EU Refining)

Week 21 25•May•2022 www. NEWSBASE .com P5