CARACAS: ATMI and Lukoil are understood to have been sourcing US Gulf Coast naphtha this week for shipment to Venezuelan state-run oil company PDVSA for use as crude diluent after a fire at a refinery in Carabobo state, market sources said.
ATMI, the trading arm of French energy company Total, has placed two Medium Range tankers on subjects, the Rita M and the Sea Halcyone, to pick up refined products on the Gulf Coast for loading around June 10-15 with Caribbean discharge options, according to shipping sources. A Medium Range tanker is able to carry a 38,000 mt cargo.
A US refined products trader and a US refined products broker said the ships were assigned to deliver naphtha to PDVSA, with the trader saying the product was standard naphtha. The journey from the Gulf Coast to Venezuela typically takes six to seven days.
An ATMI refined products trader did not respond to an inquiry about the ships.
According to a shipping source, the demand for naphtha in Venezuela is likely due to a recent fire-related shutdown at PDVSA’s 140,000 b/d El Palito refinery in Carabobo state.
“Usually you see naphtha moving out of Venezuela. The only reason you’d see naphtha moving into Venezuela is probably because of the fire at the El Palito refinery last week,” said the shipping source.
“The whole refinery is down I’ve heard, and it’s likely only to be up next week. So they probably don’t have enough naphtha,” the source added.
Separately, PDVSA-owned Citgo has placed the 49,999 dwt Torm Laura on subjects to take a June 10-12 loading refined product cargo from the Gulf Coast to the Caribbean.
A market source familiar with Latin America said ATMI won a tender to supply diluent naphtha to PDVSA’s crude upgraders last week. The source said Lukoil also won some of the barrels sought in the tender, with a Lukoil refined products trader not responding to a request for comment.
The source said ATMI does not typically supply Venezuela with naphtha.
“Not that I know of,” the source said. “It’s usually Citizens or Lukoil or Gunvor, even Noble.”
Citizens sold PDVSA 300,000 barrels of diluent naphtha in January.
Some of the naphtha for Venezuela will likely come from the 174,000 b/d ATMI refinery in Port Arthur, Texas, market sources said.
“They are pricing right now. I would think a lot of it is probably from Port Arthur,” the trader said.
Typically, a shipper to the Caribbean will assemble barges of Gulf Coast naphtha into an export cargo. “It’s a pain,” the trader said.
The US broker said naphtha shipments to Venezuela provide challenges.
“Selling into PDVSA is a gamble,” the broker said. “They’re so broke down there. You can face missed window penalties and demurrage. I’d much rather lift than sell there, but the tide has turned.”
A PDVSA spokesman was not immediately available for comment.
The Rita M was seen bound for Port of Spain, Trinidad and Tobago, on Wednesday, according to Platts cFlow ship-tracking software. The Sea Halcyone was anchored off Galveston Island, Texas, cFlow showed.
PDVSA has sought various sources for diluent recently, including naphtha.
A second Latin American source, told about the naphtha fixtures, said he suspects PDVSA might have sought natural gasoline to blend with crude.
The Venezuelan company in October 2014 imported 2 million barrels of light Algerian crude that was expected to be used to dilute extra heavy Venezuelan crude.
PDVSA had intended to reduce its exports of diluted crude oil. Extra heavy crude from the Orinoco Belt is diluted with imported naphtha, while Algeria has seen a reduction in exports of light crude to the US. That crude has been replaced by crude from shale oil.
Meanwhile, ATMI has entered bids for standard and heavy naphtha totaling 300,000 barrels this week in the Platts Market on Close assessment process. The bids did not draw seller interest in the MOC process.
The value of standard naphtha, which has a maximum API gravity of 63 and a minimum boiling point of 175 degrees, has risen in the past week on demand from South America and Asia. In addition, orders for naphtha in Europe for delivery to China this month have lifted worldwide markets.
Standard naphtha was assessed Wednesday at $1.8146/gal, up 11.21 cents from May 27. It has been on a steady climb since early April and has managed to find a floor at $1.80/gal this week after previously struggling to stay above that threshold.
