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Africa moves into oil gap left by Venezuela

NEWS ANALYSIS: Africa moves into oil gap left by Venezuela

 

A SLOWDOWN in crude exports from Venezuela to its neighbours has allowed African oil producers to gain a foothold among Latin American buyers, according to traders and data, and sales to one of the few regions with strong demand will keep growing.

Just months ago African producers were scrambling to find new clients in the western hemisphere, having largely been pushed out of the US market by the onshore shale oil revolution.

African exports are also growing now as Mexico and Brazil lack spare capacity to increase sales to neighbours. US companies, which dominate refined products trade in the Americas, cannot export crude because of a decades-old ban imposed by Washington.

Africa sent at least 8-million barrels to South America in the first two months of this year, double the amount a year earlier, according to Reuters data.

While African crude tends to be light, and so more expensive than Venezuela’s heavy, sour oil, falling prices allow refiners to afford lighter grades that better fit their configurations.

Including additional cargoes of African oil bought from intermediaries, South America is getting about a quarter of its supplies from Africa.

The Inter-American Development Bank calculates that South America normally imports some 700,000 barrels a day of crude. “African crudes have been cheap, and they are also a very good option to fill idle capacity at many Latin American refineries that cannot process a big volume of heavy crudes,” a trader said.

Countries such as Uruguay and Argentina are trying to substitute Venezuelan supplies with African crudes as the Andean country struggles to meet supply quotas under trade pacts.

Venezuela’s overall exports fell by 100,000 barrels a day to 2.33-million barrels a day last year. But the drop has been sharpest in Latin America and the Caribbean in recent years.

Chile, Brazil and Peru like African supplies because most of them are light and have a lower sulphur content than other regional or European grades.

With fewer supplies from Venezuela, countries such as Uruguay are tendering to import from Nigeria, Angola and Brazil.

Uruguay’s ANCAP plans to buy 16-million to 17-million barrels of crude this year but only 4.5-million will come from Venezuela, down 25% from previous years, the firm said.

Other countries have inked long-term supply agreements. Chile’s ENAP last year signed a pact with Angola’s state-run Sonangol that turned it into Chile’s largest supplier.

Reuters

A woman walks past the head office of Sonangol in Luanda, Angola. Picture: REUTERSA woman walks past the head office of Sonangol in Luanda, Angola. Picture: REUTERS

A SLOWDOWN in crude exports from Venezuela to its neighbours has allowed African oil producers to gain a foothold among Latin American buyers, according to traders and data, and sales to one of the few regions with strong demand will keep growing.

Just months ago African producers were scrambling to find new clients in the western hemisphere, having largely been pushed out of the US market by the onshore shale oil revolution.

African exports are also growing now as Mexico and Brazil lack spare capacity to increase sales to neighbours. US companies, which dominate refined products trade in the Americas, cannot export crude because of a decades-old ban imposed by Washington.

Africa sent at least 8-million barrels to South America in the first two months of this year, double the amount a year earlier, according to Reuters data.

While African crude tends to be light, and so more expensive than Venezuela’s heavy, sour oil, falling prices allow refiners to afford lighter grades that better fit their configurations.

Including additional cargoes of African oil bought from intermediaries, South America is getting about a quarter of its supplies from Africa.

The Inter-American Development Bank calculates that South America normally imports some 700,000 barrels a day of crude. “African crudes have been cheap, and they are also a very good option to fill idle capacity at many Latin American refineries that cannot process a big volume of heavy crudes,” a trader said.

Countries such as Uruguay and Argentina are trying to substitute Venezuelan supplies with African crudes as the Andean country struggles to meet supply quotas under trade pacts.

Venezuela’s overall exports fell by 100,000 barrels a day to 2.33-million barrels a day last year. But the drop has been sharpest in Latin America and the Caribbean in recent years.

Chile, Brazil and Peru like African supplies because most of them are light and have a lower sulphur content than other regional or European grades.

With fewer supplies from Venezuela, countries such as Uruguay are tendering to import from Nigeria, Angola and Brazil.

Uruguay’s ANCAP plans to buy 16-million to 17-million barrels of crude this year but only 4.5-million will come from Venezuela, down 25% from previous years, the firm said.

Other countries have inked long-term supply agreements. Chile’s ENAP last year signed a pact with Angola’s state-run Sonangol that turned it into Chile’s largest supplier.

Reuters

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