Vitol to load first diluent cargo under Venezuela supply deal last weekend
- Vitol to export about 460,000 bbl of naphtha from Houston (Texas, U.S.) to Venezuela
- Cargo would be first under new supply agreement with U.S. government
- Naphtha used as diluent and needed to boost Venezuela oil output
- S. supplies could displace Russian naphtha in Venezuela
Commodities trader Vitol is expected to load the first cargo of naphtha from the U.S. to Venezuela this weekend under a new supply agreement announced just days ago by President Donald Trump, two sources familiar with the matter said on Saturday.
The flow of naphtha, used as a diluent to thin Venezuela's heavy crude oil and make it easier to move and process, would mark a key milestone in efforts to boost production in the South American country as the Trump administration focuses on reviving its oil industry after removing President Nicolas Maduro from power last week.
State-run PDVSA had been reducing output in recent days after a months-long U.S. naval blockade cut its shipments and forced it to store oil on ships as onshore tanks filled up.
Vitol and its trading peer Trafigura struck agreements with the U.S. government to help market the stranded Venezuelan oil (learn more), the companies confirmed on Friday, days after the interim government in Caracas agreed to export up to 50 MMbbl of crude oil to the U.S.
With Venezuelan oil expected to start flowing again, the commodities traders and oil major Chevron have been sourcing naphtha to ship it to Venezuela and help revitalize crude production in the country, sources told Reuters.
Vitol has chartered the vessel Hellespont Protector to load roughly 460,000 bbl of naphtha from Houston, sources said. The vessel is currently looking for a window to load the product over the weekend and is expected to deliver it in Venezuela sometime next week, they added.
The sources requested anonymity to discuss confidential details. Vitol declined to comment.
Vitol and others had been supplying diluents to Venezuela until the U.S. government early last year began canceling licenses as part of a policy shift toward the country.
Imports of diluent from Russia helped Venezuela replace the volumes it was receiving from the U.S. after those cancellations, and the U.S. could now take back that share from Russia, Commodity Context analyst Rory Johnston said.
"Total diluent imports into Venezuela have been pretty flat over the past year, and assuming the current situation cuts off Russian naphtha flow, then the U.S. will need to replace ASAP to avoid further upstream shut-ins," Johnston said.
Comments