US sanctions on PdVSA and Venezuela are already having a significant impact. Imports of clean products into Venezuela were halted for 11 days from the end of January, while Venezuelan crude exports to the US have dropped considerably.
Mainland Venezuela did not import gasoline or middle distillates from January 30, two days after the US imposed sanctions on Venezuela, until February 10. The only shipment registered so far in February is from PdVSA’s St. Eustatius terminal, from which 322,000 bbls of ethanol have been shipped. In January, the South American country imported an average of 82,000 bpd of middle distillates, the highest on our records since June 2016. At 206,000 bpd, imports of gasoline and blending components were the third highest in our records, surpassed only by the pace from November and December.
Venezuela gets the vast majority of its clean product imports from the US. Magellan’s Galena Park Terminal and Citgo’s Lake Charles refinery were the top exporters of gasoline and blending components to Venezuela in January, at 59,000 bpd and 48,000 bpd, respectively.
Venezuela relies on diluent imports to help transport its heavy crude, as well as meet its own domestic demand for fuel. A recent lack of imports mean the country could soon run out of fuel for the domestic market, as well as the naphtha needed to facilitate exports.
It remains to be seen how European recognition of Juan Guaido as interim president will impact flows to Venezuela. After nearly a year-long absence, Spain resumed gasoline exports to Venezuela in November. Spanish exports of gasoline have averaged 25,000 bpd since then. Another European supplier has emerged recently, with 267,000 bbls arriving from France last month – the first since late 2014.
The lack of clean products imports could lead to a critical situation for the OPEC member, though Nicolas Maduro could use the crisis as a way to blame the opposition for the state of affairs.
When it comes to oil exports, Venezuelan flows to the US have dropped significantly, but not completely. We have seen half a dozen deliveries so far this month to US Gulf destinations, although all of them loaded prior to sanctions. PBF’s Paulsboro refinery on the Atlantic Coast took in one shipment as well. As is typical, we have seen one delivery to a Citgo refinery — 580,000 bbls of DCO to Corpus Christi.
Vessels are also building up offshore in the Gulf of Mexico. We currently see several vessels floating in the Gulf of Mexico waiting to offload in the US and no new shipments sent from Venezuela. With the US market closing to Venezuela, we are seeing Venezuelan crude heading to other destinations such as Spain, China, India, Sweden and Singapore.