Page 7 - NorthAmOil Week 21 2022

NorthAmOil COMMENTARY NorthAmOil

above appear to signal that there is a US policy Prior to the invasion of Ukraine in late Febru-
shift in the works. Moreover, they also seem to ary, Europea countries were importing around
indicate that one of the considerations driving 2.3mn barrels per day of crude from Russia, and
this shift is Washington’s desire to stabilise world delivery volumes were reported to be down by
crude oil markets. about 20% as of mid-April. That would put them
at around 1.84mn bpd – and that’s a figure that
US miscalculations Venezuela has no hope of matching any time
Unfortunately, though, they may also indicate soon.
that the Biden administration does not have a The South American country is currently
very deep understanding of world crude oil mar- producing about 700,000 bpd and has to keep
kets – or at least, to give those involved the bene- some of these barrels back for its own use, and
fit of the doubt, is not bothering to communicate it won’t be in any position to boost output sub-
its understanding and intentions very clearly. stantially unless PdVSA secures supplies of
One of the more interesting statements made several different types of goods and services.
by Bloomberg source last week was that Wash- It needs parts and equipment to repair its pro- It is not clear
ington was taking this step partly because it duction and processing complexes, as well as
wanted Eni and Repsol, the only two foreign its pipelines and ports, and it also needs experts how much impact
companies still operating in Venezuela, to be and technicians to help carry out these repairs, such moves are
able to deliver more crude to the European which have been neglected for several years.
market. With that barrier lifted, the source said, The NOC also needs more gas condensate expected to have
Europe should have an easier time covering and other blendstocks so that it can combine
demand and overcoming the supply disrup- its own extra-heavy crude oil output to make – or, indeed,
tions resulting from the interruptions in Russian a lighter synthetic fuel that is of more interest
crude deliveries, he said. to customers. what kind of
According to Bloomberg’s report, this assis- On that note, it’s worth remembering that impact.
tance for Europe may come at the expense of PdVSA has historically not sold much oil in
other parties. One of the multiple sources cited Europe. The company doesn’t have a huge cus-
by the news agency said that Eni and Repsol tomer base in the European market, mostly
were working with US authorities to divert car- because its offerings are not much in demand
goes of Venezuelan crude heading for China to among refiners in Europe. (This is true for both
the European market. its heavy/extra-heavy crudes and its lighter
blended synthcrudes; many European refiners
What can Venezuela do? would rather have light sweet crudes from the
It is not clear how much impact such moves North Sea or West Africa or medium sours from
are expected to have – or, indeed, what kind of the Middle East or Russia than heavier, tar-like
impact. grades from South America.)™

Week 21 26•May•2022 www. NEWSBASE .com P7