US Potential Ban on Venezuelan Oil May Hit Valero Hardest

If the US bans oil imports from Venezuela, Valero Energy Corporation and Chevron Corporation may end up paying the price.

The US 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 on the 3^rd February.

In addition to exporting oil to America, Venezuela’s state-controlled oil company Petroleos de Venezuela SA also exports jet fuel to the US, 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 US refining arm Citgo Petroleum Corporation has been receiving less and less oil from its holding company as output slumps.

“Although production is declining, refinery utilisation is down in Venezuela and so it’s kind of keeping exports available to us,” Gary Simmons, Valero’s vice president of supply, said on the company’s fourth-quarter earnings call on the 1^st February.

When shale oil was not 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 US Gulf Coast, home to one of the world’s largest clusters of refineries, American fuel makers grew to rely more on Venezuelan crude.

It is now the second-largest supplier of crude to Gulf Coast plants, after Mexico.