The rising oil import volumes from Venezuela to U.S. Gulf Coast refineries in the past six months were not enough to reduce American reliance on Canadian heavy crude, BP's Chief Economist for the Americas Michael Cohen said on Wednesday.
In a panel discussion at the Dow Jones Energy Forum in New York City, Cohen said Venezuelan crude imports into the U.S. Gulf Coast refining system have started to tick up in the past six months following a significant decline in the last decade and a half.
And that increase in Venezuelan inflow coincided with lower Mexican crude imports due to declining wellhead output and higher crude usage by domestic refineries in Mexico, Cohen said.
"In the end, it benefits the U.S. Gulf Coast refining system, especially the refineries that have cokers and have more complex configuration," he said.
Cohen said possible displacement of some Canadian oil consumption by Gulf Coast refineries is not significant enough to call Canadian crude a "loser," because there is just as much incremental demand in the U.S. Midwest, West Coast or Asia due to the Middle East conflicts.
Still, higher U.S. oil imports from Venezuela could affect Canada's proposed pipeline project aiming to carry 1 million b/d of crude oil made from Alberta oilsands to the British Columbia coast for exports, according to Cohen.
Canada is the largest foreign supplier of crude oil to the U.S., accounting for 60% of total U.S. crude oil imports.
On Aug. 31, the White House said Venezuelan interim authorities have granted North American Blue Energy Partners, a little-known private U.S. company, 100-year concessions for 17 oil fields with more than 65 billion barrels of proven oil reserves -- about one-fifth of the country's total.
Venezuela is estimated to have the world's largest oil reserves, and the country's oil exports were as high as 3.5 million b/d in the late 1990s, compared to just over 1 million b/d now.
Most analysts agreed that Venezuela's oil output will not see significant increases in the short run due to decades of poor energy infrastructure management, while long-term commitments among companies to invest in Venezuela will be key to a meaningful production increase.
Francisco Monaldi, Director of the Latin America Energy Program at Rice University's Baker Institute for Public Policy, said most of the near-term U.S. investments in Venezuela will be brownfields -- abandoned oil fields that are the least productive and far away from any available infrastructure.
"In fact, if you look at the 65 billion barrels of reserves, you can see that most of those fields are not going to be developed anytime soon," Mondali said during the panel.
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