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- Gulf Coast refiners, including Valero and Phillips 66, are seeking to resume imports of Venezuelan heavy crude.
By Ricardo Vaz
CARACAS, (venezuelanalysis.com) – The Venezuelan oil industry has kept a recent trend of a stable output around 900,000 barrels per day (bpd), according to the Organization of Petroleum Exporting Countries (OPEC).
OPEC’s latest monthly report placed the Caribbean nation’s July production at 914,000 bpd, slightly down from 918,000 bpd in the previous month, as measured by secondary sources.
For its part, Venezuelan state oil company PDVSA reported an output of 1,084 million bpd last month, a 15,000 bpd increase compared to June. The direct and secondary data have shown minor discrepancies over time due to disagreements on the inclusion of natural gas liquids and condensates.
Venezuelan oil revenues likewise benefited from a slight uptick in crude prices, with its flagship Merey blend rising 2.2 percent month on month.
In contrast, exports receded by around 10 percent, from 807,000 bpd to 727,000 bpd, according to Reuters, as several PDVSA partners await authorization to resume shipments. An estimated 95 percent of cargoes were shipped to Chinese customers in July.
Since 2017, the US Treasury Department has heavily targeted the Venezuelan oil industry in an effort to strangle the country’s most important revenue source. Coercive measures have included financial sanctions, an export embargo and secondary sanctions.
Venezuela’s oil production has steadily recovered after hitting a decades-low of 350,000 bpd in the second half of 2020. However, the lack of access to sorely needed investments has seen output plateau at around 900,000 bpd.
In recent months, the oil industry managed to maintain steady crude production and export levels in the face of renewed US sanctions. The Trump administration withdrew licenses from several PDVSA partners, including Chevron, which were given a late May deadline to wind down activities in Venezuela joint ventures.
Caracas weathered the renewed coercive measures by stockpiling diluents and redirecting crude shipments to China. Washington threatened 25 percent “secondary tariffs” on countries receiving Venezuelan oil but has not enacted them so far.
In July, the Trump White House reversed course and issued a new specific license allowing Chevron to resume drilling and export operations from its Venezuela joint ventures. The Texas-based energy giant holds minority stakes in four projects with PDVSA that currently produce about a quarter of the country’s output.
While the new sanctions waiver was not publicly disclosed, US officials and analysts stated that Chevron would not provide cash payments to the Venezuelan state. Instead, it is expected that the US company and PDVSA will export their respective shares of crude production separately.
Venezuelan authorities have dismissed the notion that Chevron would conduct business in Venezuela without paying, but provided no further information.
Multiple sources reported that Chevron resumed crude shipments last week, with two tankers loading Hamaca and Boscan heavy crudes in Venezuelan ports destined for US refineries.
The resumption of heavy crude supplies is expected to increase profit margins for refiners in Texas and Louisiana, with corporations such as PBF Energy and Phillips 66 interested in renewing Venezuelan oil purchases from Chevron.
Valero, which bought nearly half of all Venezuelan oil shipped to the US in 2024, is reportedly in talks with Chevron to resume a supply agreement as well.
Several other Western corporations, including Repsol (Spain) and Eni (Italy), are likewise eyeing renewed waivers from Washington to jumpstart operations in Venezuelan ventures. The two companies mostly swapped crude for fuel and diluents or used it to offset existing debts.
