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Reuters/Isaac Urratia via Newscred

Venezuela’s loss is Africa’s gain in Latam crude game

HOUSTON – Shrinking crude exports from Venezuela to its neighbors has allowed African oil producers to gain a foothold among Latin American buyers, according to traders and data, and sales to one of the world’s few regions with strong demand will keep growing.

Only months ago, African producers were scrambling to find new clients in the Western Hemisphere, having largely been pushed out of the U.S. market by the onshore shale oil revolution.

African exports are also growing as Mexico and Brazil lack spare capacity to increase sales to neighbors. U.S. companies, which dominate refined products trade in the Americas, cannot export crude because of a decades-old ban imposed by Washington.

Africa sent at least 8 million barrels to South America in the first two months of this year, double the amount in the year-ago period, according to Reuters Dirty Tanker Fixtures data.

While African crude tends to be light, and therefore more expensive than Venezuela’s mostly heavy, sour oil, falling prices allow refiners to afford lighter grades that better fit their configurations.

Including additional cargoes of African oil bought from intermediaries, South America is getting about a quarter of its supplies from Africa. The Interamerican Development Bank calculates that South America normally imports some 700,000 barrels per day (bpd) of crude.

“African crudes have been cheap, and they are also a very good option to fill idle capacity at many Latin American refineries that cannot process a big volume of heavy crudes,” a trader dealing with several oil companies in the region said.

Countries such as Uruguay and Argentina are trying to substitute Venezuelan supplies with African crudes as the Andean country struggles to meet supply quotas under trade pacts.

Venezuela’s overall exports fell 100,000 bpd to 2.33 million bpd in 2014, official data show. But the drop has been sharpest in Latin America and the Caribbean in recent years, according to internal PDVSA documents.

Chile, Brazil and Peru like African supplies because most of them are light and have a lower sulfur content than other regional or European grades.

“Light, sweet crudes such as West African work better for refineries in Latin America that don’t have deep conversion units to run a big amount of heavy crude,” another trader said.

In related news, Africa’s oil “sweet spots” still viable after price rout.


PDVSA’s shipments to neighbors and China, its top client in 2013, have fallen as it tries to avoid selling crude under generous accords that crimp its cashflow.

Instead, PDVSA is steering more shipments to India for cash sales. In January and February, India imported up to 510,000 bpd in crude from PDVSA and its partners, nearly double what China received, according to Reuters Eikon data.

With fewer supplies from Venezuela, countries such as Uruguay are tendering to import from Nigeria, Angola and Brazil.

Uruguay’s ANCAP plans to buy 16-17 million barrels of crude in 2015, but only 4.5 million will come from Venezuela, down 25 percent from previous years, the firm has told Reuters.

In Argentina, state-run YPF and Enarsa last have sought 600,000-1 million barrels of a West African, North Sea or Mediterranean crude.

The firms made their first purchase of Nigerian Bonny Light last year with a 1-million-barrel cargo from trading firm Vitol, after the government lifted restrictions on imports.

Other countries have inked long-term supply agreements. Chile’s ENAP last year signed a pact with Angola’s state-run Sonangol that quickly turned it into Chile’s largest supplier.

ENAP will unload a 1-million-barrel tanker of Angola’s Plutonio crude in March after receiving at least five similar cargoes of African crudes last year, Reuters data show. The firm declined to comment.

Peru, South America’s third largest crude importer, regularly buys African crudes for refineries operated by state-run Petroperu and Spain’s Repsol.


Even Venezuela has got into the act. It bought Algerian crude in late 2014 for the first time to use as a diluent for its extra heavy oil.

African petroleum has also helped Brazil’s Petrobras satisfy increased local demand. It receives regular volumes from fields in Nigeria where it has stakes.

Brazil imported 395,500 bpd of crude and condensate in 2014, according to its oil agency, 27 percent higher than in 2012.

Since November, Petrobras has booked 17 Suezmaxes to transport some 122,000 bpd of African crudes to its terminals, about a third of total imports in that period, Reuters data show.

Nigerian crude and condensates give Petrobras a way to dilute its own heavy crudes, creating marketable blends that can potentially be exported inside and outside the region.

“The South American market continues to be a big buyer of our crudes,” said Petrobras refining and supply division chief Jorge Celestino. “We export a lot to Chile and Uruguay.”


This article was from Reuters and was legally licensed through the NewsCred publisher network.

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