Valero Has ‘Holes’ in Supply Plan as Venezuelan Sanctions Bite
(Bloomberg) -- Valero Energy Corp. is searching for alternative sources of heavy crude oil after U.S. sanctions cut off cargoes from Venezuela, which supplied 20 percent of the company’s needs.
Valero, which had been the biggest American buyer of Venezuelan oil aside from the Latin American nations’s Citgo Petroleum unit, confirmed during a conference call on Thursday that it’s not taking any more deliveries of Venezuelan crude.
The refiner began buying replacement barrels from heavy oil suppliers in Canada as recently as the start of this week, according to a person familiar with the matter. For now, covering a 30-day supply plan is Valero’s top priority, Gary Simmons, senior vice president of supply, international operations, said during the call.
An oil tanker that arrived in Venezuela the day before the sanctions were imposed to pick up oil for Valero has departed the country empty, according to ship-tracking data compiled by Bloomberg.
“We’re in a lot better position today than we were on Tuesday but we still have some holes to fill in our supply plan,” Simmons said during the call.
The full impact of the sanctions has been muted somewhat by maintenance work at a Louisiana refinery that’s reduced the amount of oil Valero needs to buy, he said.
What Bloomberg Intelligence Says“Valero and other U.S. refiners should expect a sharp reaction to U.S. sanctions on Venezuela in the form of immediate oil-export curtailment. While the sanctions contain a wind-down period, banks, shipping companies and traders often react by immediately refusing to operate with companies targeted by U.S. authorities.”
--James Blatchford and Caitlin Webber, government analysts
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