Exclusive: Venezuela ends Algeria oil imports due to logistical, price issues - sources
By Marianna Parraga
HOUSTON (Reuters) - Venezuela's state-run oil company PDVSA has stopped purchases of Algerian light crude to blend with its extra-heavy oil because of technical problems and disagreements with the seller, sources said.
The decision ends a cost-saving effort launched in October to use Algerian Saharan Blend instead of costlier heavy naphtha as a diluent for domestic Orinoco Belt crude, the oil that accounts for about 40 percent of Venezuela's output.
PDVSA had mixed up to 4 million barrels of Algeria's light crude into its extra heavy oil to make blends for export, mainly to the United States and China, according to Reuters vessel tracking data.
In January it resumed international tenders to buy heavy naphtha to use as a diluent, according to documents seen by Reuters, raising questions about how the company would continue to cut operational costs as sinking oil prices erode Venezuela's revenue and force the government to seek foreign credit.
"PDVSA is informing partners and traders that it will not buy any more Saharan Blend after logistical problems," said a trader who deals with PDVSA and who requested anonymity because was not authorized to speak publicly on the subject.
"Naphtha purchases, instead, can be unloaded and transported to mix with Orinoco belt's extra heavy oil," he said.
Experts have pointed out that the OPEC-member nation lacks adequate infrastructure to regularly unload large crude cargoes and, especially, to store and transport the imported oil to mixing hubs deep in the Orinoco belt.
A source at Algeria's state-run Sonatrach confirmed that the company "has stopped exports to Venezuela" and another industry source said the disagreement was over price. Continued...