Chevron, Valero in Talks to Reactivate Supply Agreement on Venezuelan Oil to US, Sources Say

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Chevron and Valero Energy are working to resume supplies of Venezuelan crude to Valero’s U.S. refineries under an agreement that was on pause, three sources close to the preparations said on Tuesday, following a new license granted to the U.S. oil major.

Washington in late July issued a new restricted authorization for Chevron to operate, swap oil and export crude from sanctioned Venezuela in a policy shift following a prisoner swap. The U.S. producer last week said it expected to resume oil shipments this month, starting with a small volume.

As Chevron waits for Venezuelan state company PDVSA to allocate cargoes for August delivery, Chevron and Valero are negotiating details of their agreement, including resuming a ship-to-ship operation off the Caribbean island of Aruba.

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Valero’s cargo transfer off Aruba could restart as soon as this month, following mandatory inspections and vessel contracts in negotiation, one of the sources said.

Chevron and Valero did not immediately respond to requests for comment.

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In the first quarter, before Chevron’s license to operate in Venezuela was revoked, Chevron supplied some 50,000 barrels per day (bpd) of Venezuelan heavy crude to Valero’s refineries from Aruba, according to shipping data.

The volume represented about 20% of Chevron’s total exports of Venezuelan oil in that period, the data showed.

The supply deal is key for Chevron’s second largest joint venture in Venezuela, Petroboscan in Venezuela’s western region, due to limitations in storing the heavy Boscan crude produced by that project, which have forced output cuts in the past.

(Reporting by Marianna Parraga and Arathy Somasekhar, additional reporting by Sheila Dang, editing by Deepa Babington)