Heavy oil is what refineries on the U.S. Gulf Coast process, and there are only a handful of countries that produce it.
By contrast, most oil produced in the U.S. is light, sweet crude. If Venezuelan oil flows freely, it could potentially reduce the price of oil and gasoline.
American refineries could benefit financially from processing more crude oil, and it could increase the availability of diesel and jet fuel, said Kevin Book, managing director of ClearView Energy Partners.
There seem to be two (American) objectives. The first is to overall lower energy prices by adding to global supply, and second is to produce more of the heavy, sour crude that is currently in short supply relative to other grades," Book said. "The first generally benefits end-users everywhere because lower prices reduce transportation and energy costs."
Moreover
Phillips 66 CEO Mark Lashier said he sees a longer-term potential for growth as Venezuela - which was producing as much as 3.5 million bpd in the 1970s - ramps up production.
"We've got refineries designed for the long term to process that crude," Lashier said. He, however, added that it would take "years, if not decades" of investment by upstream companies to realize the full potential.
"This is an opportunity for Venezuela to return back into the capitalist folds, to bring their economy and to benefit their people over the long term," he said.
Venezuelan crude is a heavy sour grade with high sulfur content, making it suitable for producing diesel and heavier fuels, albeit at lower margins compared with other grades, particularly those from the Middle East. |
