By Georgina McCartney and Arathy Somasekhar
HOUSTON, Jan 21 (Reuters) – Valero has bought a cargo of Venezuelan crude oil, two sources said on Wednesday, one of the first deals by U.S. Gulf Coast refiners that are part of Washington’s agreement with Caracas to export up to 50 million barrels.
Phillips 66 has also purchased a cargo, one of the sources said.
Both bought the crude from trading house Vitol, the sources said, adding that it was traded for delivery to the U.S. Gulf Coast at a discount of about $8.50 to $9.50 a barrel to Brent crude.
Vitol and rival trading house Trafigura were the first firms to be awarded licenses by the U.S. government to trade Venezuelan crude after President Nicolas Maduro’s ouster in early January.
While Valero and Phillips 66 have been buyers of Venezuelan crude through the Venezuelan state oil company’s partner, Chevron, the deals mark the first purchases for the U.S. from the trading houses that were only authorized this month to market crude from Venezuela.
The sources declined to be identified as trade deal information is confidential. Valero and Vitol did not reply to requests for comment. The White House also did not respond to a request for comment.
Phillips 66 said on Thursday that while it does not comment on commercial activity, its Gulf Coast refineries are configured to process a wide range of oil, including heavy crude.
“Access to heavy crude presents a valuable opportunity for our system. We optimize our crude slate based on availability, economics, and operational needs,” the company said in an emailed statement.
Vitol and Trafigura bought the Venezuelan oil at a $15 a barrel discount to the global Brent benchmark, according to the sources. U.S. Energy Secretary Chris Wright also said on Friday that initial sales of Venezuelan heavy crude worth some $500 million had been negotiated at $15 a barrel discount to Brent.
The trading houses will incur the cost to ship the crude to the U.S. Gulf Coast, which ranges between $2.5 and $3.5 a barrel depending on the size of the tanker, shipping sources said. That would give them a margin of between $2 and $4 per barrel for the Venezuelan oil they resell.
Offers of Venezuelan flagship Merey heavy crude to U.S. refiners began last week at a discount of between $6 and $7.50 per barrel to Brent, but moved lower due to little interest. Vitol and Trafigura also made offers to Indian refiners at $8-8.50 per barrel below Brent, but that has also elicited little interest.
Before sanctions were imposed in 2019, several large U.S. Gulf Coast refineries bought and processed up to 800,000 barrels per day of Venezuela’s heavy oil, according to U.S. government data.
(Reporting by Georgina McCartney and Arathy Somasekhar in Houston; additional reporting by Marianna Parraga and Shariq Khan; Editing by Christian Schmollinger, Edwina Gibbs and Nick Zieminski)
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