UPDATE 2-NuStar cuts Venezuela oil pact for asphalt plants, eyes Canada
By Marianna Parraga
Nov 8 (Reuters) - U.S. oil company NuStar Energy said on Friday it had agreed to sever a crude supply contract with Venezuela's state-run PDVSA 15 months early, a move sources said would allow it to use cheaper Canadian crude for its East Coast asphalt plants.
While the 30,000 barrel per day (bpd) supply contract is equivalent to only about 4 percent of total U.S. imports from Venezuela, the decision to end the contract is the latest sign of how growing North American oil production is reducing imports and giving refiners more options.
The termination, effective in January, came after both companies reached a mutual agreement that NuStar said will reduce its financial liability. The original termination date of the contract was March 2015.
A spokesman of San Antonio, Texas-based NuStar was not immediately available to give more information about the termination.
But two trade sources said the best option for NuStar was to replace the Venezuelan supplies with Canadian heavy naphthenic crudes that can be transported by rail to the East Coast, reducing costs for the company.
"The deal will significantly reduce financial liability for NuStar Energy LP and will allow NuStar Asphalt Refining LLC the additional refining flexibility to meet current market demand," said Curt Anastasio, president and chief executive officer of NuStar Energy LP.
The Paulsboro, New Jersey, and Savannah asphalt refineries signed the supply contract with PDVSA in 2008, after being sold to NuStar by PDVSA's subsidiary Citgo, and were receiving Bachaquero and Boscan heavy crudes in recent years.
In 2012, NuStar spun its asphalt operations into a joint venture with an affiliate of Lindsay Goldberg LLC, keeping the crude supply contract with PDVSA.
The news comes days after PDVSA launched an unusual tender to sell three cargoes of heavy crudes, looking for a buyer for its Laguna, Bachaquero and Bachblend types.
For its side, PDVSA can increase heavy crude supplies to its second biggest costumer, China - the company is paying with crude billionaire debts contracted by the Venezuelan government - and tender the surplus of heavy crudes such as Bachaquero.
According to trading information, PDVSA is monthly sending to China four VLCC (very large crude carrier) of fuel oil, seven medium-size cargoes of jet fuel, three medium-size cargoes of ultra low sulfur diesel and variable volumes of Boscan crude.
- Exclusive: Malaysia plane probe narrows on mid-air disintegration - source
- Radar showed missing plane may have turned back: Malaysia military
- Missing Malaysian jet may have disintegrated in mid-air: source |
- Malaysian plane presumed crashed; questions over false IDs |
- Merkel raps Putin as Russian forces tighten grip on Crimea |