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Originally published Thursday, February 2, 2012 at 7:01 AM

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Venezuela's oil exports to US decline

Venezuela's oil exports to the United States have dipped in recent months to their lowest level in nearly nine years, according to new U.S. government figures, reflecting a long-term trend of declining oil shipments during President Hugo Chavez's 13-year-old government.

Associated Press

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CARACAS, Venezuela —

Venezuela's oil exports to the United States have dipped in recent months to their lowest level in nearly nine years, according to new U.S. government figures, reflecting a long-term trend of declining oil shipments during President Hugo Chavez's 13-year-old government.

The U.S. imported 764,000 barrels per day of Venezuelan crude oil and refined products such as gasoline in November, the last month for which figures are available, according to U.S. Energy Information Administration figures released this week.

That was the lowest monthly amount since February 2003, when 613,000 barrels a day were imported at the end of an oil industry strike that hobbled Venezuela's economy.

The United States remains the top market for Venezuelan oil, but Chavez has been diversifying his country's clientele by selling more to China and to allies in Latin America and the Caribbean.

Fluctuations in oil shipments are normal month-by-month, but the latest figures also show that U.S. imports from Venezuela declined during the first 11 months of 2011 to an average of 952,000 a barrels a day, down from 988,000 barrels a day during 2010. It's a marked change from the nearly 1.5 million barrels a day that Venezuela sent to the U.S. market in 1999, when Chavez took office.

Alberto Quiros, a Venezuelan oil expert and former Shell executive, said the drop is due in part to increasing sales to China and other countries by state-run Petroleos de Venezuela SA, or PDVSA. He said maintenance troubles also have diminished output from refineries.

"I think the problem PDVSA has is that it lacks supply," Quiros said. "Shipments to the United States have decreased, and the number of purchases from third parties has increased to be able to comply with commitments."

The U.S. government figures also show a sharp drop in the amounts of refined oil products arriving from Venezuela, from 288,000 barrels a day in 2005 to 79,000 barrels a day in the first 11 months of 2011.

Venezuelan Oil Minister Rafael Ramirez said last year that the country intends to keep shipping current amounts of oil to the United States. "We have long-term contracts and we comply with them strictly," Ramirez said.

Venezuelan officials did not immediately comment on the latest U.S. statistics, which were posted on the Energy Information Administration's website this week and reported by Venezuelan newspapers on Wednesday.

Gustavo Coronel, an energy consultant and former executive of PDVSA, said "the impact of this decline on the U.S. market is small. It is easily compensated by Saudi Arabia, Canada and other suppliers."

But he said Venezuela's government is taking a financial hit because officials "are not selling their dwindling volumes of oil at commercial prices." Coronel noted that about 300,000 barrels a day are sold to Caribbean countries under preferential credit terms that mean less cash flowing into Venezuela's coffers.

Coronel and other critics also note that rising domestic demand for heavily subsidized gasoline, which sells for as little as 6 cents a gallon (1.6 cents a liter), cuts into the amount of fuel that can be sold internationally at market prices.

Venezuela has set a goal of more than doubling shipments to China, which has in turn provided billions of dollars in loans-for-oil deals. Ramirez has said Venezuela is shipping China more than 400,000 barrels of crude a day.

Chavez, meanwhile, has announced plans to increase oil output, saying in a speech to lawmakers last month that Venezuela is producing 3 million barrels a day and plans to raise that soon to 3.5 million barrels.

Many analysts say Venezuela is actually producing far less than the government claims. OPEC has estimated Venezuela's oil production recently at 2.4 million barrels a day.

"Since production hasn't increased but rather has decreased a little, that oil has to come from somewhere," Quiros said. "Diversification of markets is a sensible strategy. That bad thing is when that diversification (comes) at the cost of the more profitable market."

Chavez has denied that Venezuela is losing financially through its oil deals with China and Caribbean countries, saying the country is on a better financial footing as a result of diversifying.

Quiros said the recent announcement that the huge Hovensa refinery in the U.S. Virgin Islands will close this month seems linked to a lack of crude shipments from Venezuela. Much of the oil processed at the refinery has traditionally come from Venezuela, and Hovensa is a joint venture of U.S.-based Hess Corp. and PDVSA.

Hovensa said it was closing because losses have totaled $1.3 billion over the past three years. The shutdown is also part of a larger trend across the U.S. of refineries closing due to the economic crisis and shifting markets.

Jorge Pinon, a research fellow at the University of Texas' Center for International Energy and Environmental Policy, said shutting down the Hovensa refinery "was a sensible economic decision."

"The refinery was loosing money for a number of reasons and it was financially beneficial to both partners shutting it down," Pinon said.

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