CARACAS, Wednesday August 27, 2014 | Update

Venezuela considers importing crude oil from Algeria

This would the first time Venezuela resorts to purchases of crude oil abroad, as this crude is required for blending with heavy crude oil from the Orinoco Oil Belt and subsequent export

Wednesday August 27, 2014  06:34 PM
Venezuela is pondering the possibility of  importing crude oil for the first time ever and could use light oil from its partner in the Organization of Petroleum Exporting Countries (OPEC), Algeria, to dilute its own heavy crude, according to a document of state-run oil giant Petróleos de Venezuela (Pdvsa) obtained by Reuters on Wednesday.

Despite holding the largest oil reserves in the world, in recent years Pdvsa has been buying increasing amounts of heavy naphtha for blending with heavy crude from the Orinoco Oil Belt, the largest oil producing region in the country.

These blends are made to convert extra-heavy oil into an exportable product. Local production of medium and light crude oils previously used as diluents has declined and the construction of new oil upgraders is lagging behind.

Pdvsa has been purchasing naphtha at high prices on the open market, which hits the company's cash flow and undermines the main source of revenue for the government of Nicolás Maduro.

"(The Department of) Commerce (of Pdvsa) assesses the recent strategy of importing Saharan Blend crude from Algeria," reads the document, which evaluates the transportation costs for imported oil.

Pdvsa recently told its foreign partners in Venezuela it was holding negotiations with Algerian state-run company Sonatrach to buy crude oil, said a source close to the companies.

The state company was not immediately available for answering questions from Reuters.