By Marianna Parraga
Though Venezuela
has the world's largest crude reserves, PDVSA has been buying a growing
volume of refined products such as heavy naphtha in recent years to mix
with its crude output from the vast Orinoco belt - its largest producing
region.
That is done to
make the extra heavy crude exportable as extraction of domestic medium
and light crudes, which had been used as diluents, declines.
Naphtha
is currently being imported at high prices paid on the open market and
has hurt the cashflow of PDVSA, which is the main source of revenue for
the government of President Nicolas Maduro.
"The (PDVSA)
commerce department evaluates a strategy of importing Saharan Blend from
Algeria," said the document that evaluated freight costs of crude
imports.
PDVSA
recently told its foreign partners in Venezuela that it is holding
negotiations with Algeria's state-run Sonatrach to make purchases of
crude, a source close to the companies said,
The oil company did not answer requests for comments on possible crude purchases.Venezuela's Petroleum minister, Rafael Ramirez, said earlier this year that PDVSA could import crude as a "last resort" to find diluents for its heavy crudes. But he did not elaborate on the controversial issue.
Crude imports would be less expensive through a supply contract when compared to costly naphtha.
In
July, PDVSA launched a tender to buy at least four 500,000 barrel
cargoes of heavy naphtha for September through December and, according
to traders, Petrochina and trading firms Delaney and Noble Group were
awarded with the offer.
The South American country has been an oil exporter for
almost a century. Last year it sold 2.43 million barrels per day (bpd)
of crude and products to foreign clients, according to public PDVSA
figures.Venezuela and Algeria have been closely allied within the OPEC in recent years, even though they have never entered a joint venture.
CUTTING COSTS
The document said PDVSA could use its tankers in its own fleet, including two very large crude carrier (VLCC) tankers that recently entered service, to bring the crude over.
PDVSA has been expanding its tanker fleet to cover longer routes to destinations such as China and India as part of a wider strategy to reduce freight costs.
Last year, it was in talks with U.S. refiner Valero Energy to partially restart the 235,000 barrel per day Aruba refinery to produce heavy naphtha, but this and other attempts to cut import costs have been unsuccessful.
Mixing its heavy crudes with a light sweet crude would create a more marketable blend for PDVSA. Its current blend of crude and naphtha, known as diluted crude oil (DCO), lacks buyers and is mainly sent to its U.S. unit Citgo.
DCO production has increased as PDVSA and half a dozen foreign partners, including U.S. Chevron, Italy's ENI and Spain's Repsol, face delays building new upgraders that would convert the extra heavy oil into lighter crude with wider international demand.
The Algerian imports would bring enough diluent to Venezuela until the new upgraders start.
Other Latin American oil producing countries are also considering crude imports to cut pricey finished fuel purchases, such as Mexico and Argentina.
Mexico's state-run PEMEX recently said it is also poised to import oil, mainly condensates and light crudes, abandoning a decades-old devotion to self-sufficiency.
FAR DESTINATIONS
Algeria's Saharan Blend, a super light sweet crude of 45 API degrees, is usually shipped from the Arsew, Bejaia and Skikda terminals. All three ports features single buoy mooring, at which VLCCs and Suezmaxes can be loaded.
To transport crude from Algeria - which has plenty inventories of this grade - to Venezuela would take some 20 days, shorter than the China-Venezuela route, and PDVSA could save around $3 million per shipment using its own fleet, according to the document.
After delays and
problems with foreign shipyards building new vessels, the company now
has six new tankers, including VLCCs and Suezmaxes.
These
units are part of 42 vessels PDVSA ordered starting in 2006 to replace
its fleet by the end of 2012. But only a few of them have set sail.
Using its own
fleet would allow PDVSA to cut freight costs while diverting an
increasing volume of oil to Asia as shipments to North America, Latin
America and Europe decline.
(Reporting by Marianna Parraga; Editing by Terry Wade and Marguerita Choy)
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