HOUSTON Aug 28 At least three oil-producing
Latin America countries may soon start importing cheap, light
crude to replace costly purchases of refined products, ending
decades of crude self-sufficiency.
State-run companies in Mexico, Venezuela and Argentina have
said they are considering importing light crudes.
Those could be blended with domestically-produced heavy
crudes so they can be more easily exported, or be used to
improve the crude diet of old refineries that lack enough deep
conversion capacity to transform heavy oil into light products
such as gasoline and diesel.
Latin American countries are scrambling to curb rising costs
for fuels, used mostly for transportation and power generation,
that have weighed on budgets as demand grows.
The fuel is often purchased on the open market at a hefty
markup. Those outlays could be slashed by entering crude supply
contracts and tapping into surging output of light crudes, some
of them from the U.S. shale oil boom.
Though the crude imports could help trim public
expenditures, they could also cause political headaches as the
countries have enjoyed crude self-sufficiency for almost a
century. These nations jointly produce some 6.4 million bpd.
"This commercial agreement is intelligent because Pemex is
upgrading its refineries to process more heavy crude and they
are trying to increase utilization rate in the meantime", said
Luisa Palacios, from Medley Global Advisors in New York.
Venezuela is different.
"Imports are now a necessity for PDVSA to be able to export
more heavy crudes. Politically, it is a decision difficult to
Mexico's Pemex said on Thursday it wants to start light
crude imports later this year, potentially reaching 70,000
barrels per day (bpd) through a swap mechanism with companies
that must be approved by the U.S. government.
PEMEX said it is also in talks with other countries to
guarantee light crude supplies for its refining network.
That came a day after Reuters revealed Venezuela's PDVSA may
import Saharan Blend from Algeria's state-run Sonatrach to
mix it with its own extra heavy crudes from the vast Orinoco
belt. The imports would be a stopgap measure until long-delayed
equipment projects known as upgraders come to fruition.
Venezuela has not said when the imports from its OPEC-ally
would start or what the volumes would be.
Algeria's Saharan Blend, a light sweet crude with 45 API
degrees, is currently sold $40 cents below Brent.
Mexico and Venezuela, Latin America's largest oil producers
alongside Brazil, which has long imported crude, expect the oil
imports to be temporary until they modernize and expand their
refineries and upgraders.
Argentina has also announced it is trying to save costs by
replacing fuel imports with planned light crude purchases
through 2015, after its fuel import bill hit 13-$15
"These imports could be temporary if the countries solve
their refining and upgrading problems, but they won't end in the
short term," said Alejandra Leon from consultancy IHS.
(Editing by Terry Wade and Grant McCool)