Why access to Venezuela’s ‘heavy’ oil is ‘tremendous’ news for US refiners

Why access to Venezuela’s ‘heavy’ oil is ‘tremendous’ news for US refiners Venezuela’s oil type is particularly lucrative for US refineries, according to analysts. The United States’ bid to control Venezuela’s oil sector after abducting Venezuelan President Nicolas Maduro has shone a spotlight on the type of crude held by the Latin American country. Crude oil, which is produced by about 100 countries, comes in hundreds of varieties that differ by viscosity and sulfur content. Recommended Stories list of 4 items list 1 of 4 Trump suspends immigrant visas for 75 countries: Who’s affected? list 2 of 4 Bangladesh’s Muhammad Yunus Era list 3 of 4 Russia unlikely to risk ‘reputation failure’ by intervening in Iran unrest list 4 of 4 Japan, Philippines sign new defence pacts amid surging China tensions While all grades of crude oil are valuable, their differing properties make certain grades more sought after in some markets than others. What is the difference between ‘heavy’ and ‘light’ grades of oil? Crude oils are rated as “heavy” or “light” based on their viscosities, or “gravities”. Crude is also classified by sulfur content, with high-sulfur grades called “sour” and lower-sulfur varieties referred to as “sweet”. Heavy, sour grades are more difficult and costly to refine into petroleum products such as gasoline, diesel, kerosene and jet fuel. Generally speaking, lighter and sweeter crude commands higher prices. Some countries and regions primarily produce certain grades. Canada mainly produces heavy, sour crude, for example, while African varieties tend to be lighter and sweeter. Popular light, sweet varieties include Saudi Arabia’s Arabian Super Light, Iran’s South Pars Condensate, Malaysia’s Tapis Blend, and Australia’s Cossack. Among the most traded heavy, sour varieties are China’s Shengli, the United Kingdom’s Kraken, Iraq’s Basra Heavy, and Iran’s Soroosh. What type of oil does Venezuela have? Venezuela has the world’s largest proven oil reserves, at an estimated 303 billion barrels. Most of those reserves are made up of heavy, sour crude located in the Orinoco Oil Belt in the centre of the country. The basin’s oil is especially dense and vicious, with a tar-like consistency that necessitates specialist methods such as steam injection and diluents for extraction. Industry analysts say tapping the basin’s true potential will require huge investment due to the degraded state of the sector’s infrastructure and knowledge base, following late leader Hugo Chavez’s nationalisation of the industry and years of US sanctions that prevented Venezuela from accessing foreign capital and modern technology. The Latin American country’s output was estimated at about 860,000 barrels per day (bpd) in November, less than 1 percent of the world’s total, a steep decline from its 1970s peak of about 3.5 million bpd. Rystad Energy, a consultancy based in Oslo, Norway, has estimated that about $110bn in capital investment would be needed to return to the country’s late 2000s output of about 2 million bpd. US President Donald Trump, whose decision to kidnap Maduro has been widely condemned as a violation of international law, has said US oil companies...

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