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The sanctions of the Donald Trump government to PDVSA lead us to ask ourselves how the US can cover the Venezuelan oil deficit
After the recent sanctions of Donald Trump to PDVSA that will prevent the arrival of 500 thousand barrels per day of oil from Venezuela, many will wonder what other countries can arrive that amount of barrels to avoid an energy deficit inside the United States. For this, we must observe how two fundamental elements of the oil balance of that country have evolved: their production and imports.
Leer en español: ¿Cómo se va a reemplazar el petróleo venezolano en Estados Unidos?
The Shale oil boom
The latest upward surge in commodity prices at the beginning of the new millennium, led by oil prices, allowed costly financing technologies to exploit unconventional crude oil, including shale oil, which is a type of oil obtained from shale deposits using the method of hydraulic fracturing or hydraulic fracking. Thanks to the development of this technique, the US managed to reverse a trend that seemed irreversible, and that served as the basis for many geopolitical analyzes: the depletion of its oil.
Since the 70s, when it had reached its last production peak around 10 million barrels per day (MMBD), the production of US crude was plummeting until 2008 when it was below 4 MMBD. After that, an impressive recovery began thanks to the shale oil boom that raised total production in October 2018 to 11.5 MMBD of which 60% is due to the production of this unconventional crude.
This phenomenon allowed to place this western country at the peak of world production along with Russia and Saudi Arabia, and reduce its net oil imports that ranged from around 10 MMBD a decade ago to a little over 2 MMBD in 2018, which It means a reduction of 80%.
Less OPEC plus Canada
Even so, total imports have remained more or less constant around 6 MMBD, but with a significant change in the proportion of the volumes contributed by their traditional suppliers. For the year 2000, imports from all the countries belonging to OPEC represented 45%, while by 2018 the figure was reduced to 29%, of which Saudi Arabia and Venezuela together contributed 18%, that is, more than two thirds.
The reduced dependence on OPEC, which is ideal for OECD member countries, made possible by phenomena such as shale oil which gives the US a tremendous slack; but it is also due to the growth of Canadian production and its consequent exports to its neighbor.
Decades ago, Saudi Arabia, Mexico, and Venezuela were the main oil suppliers of the USA, the Latin American countries driven by their proximity and Saudi Arabia for their strategic ties in the Middle East. But the causes that made the shale oil boom possible also stimulated the production of Canada's unconventional oil mostly made up of tar sands, that is, a type of non-conventional extra-heavy crude.
High barrel prices around $ 100 gave Canada the opportunity to increase its oil production and more than double its exports to the US from 1.8 MMBD in 2000 to 4.1 MMBD in 2018, which meant almost half of the total North American imports.
Therefore the neighbor of the north will be the call to supply the deficit that would be leaving half a million barrels of Venezuelan crude prevented from arriving in the US by the recent sanctions of the Trump government to PDVSA since both are characterized by being extra heavy crude.
However, as the construction of the Keystone LX pipeline has not been completed, the facility to have such crude oil may be truncated, which is why US refineries may have to go to the spot market and obtain the crude oil with the required characteristics while defining the crisis in Venezuela.
LatinAmerican Post | Luis Alberto Lozada
Translated from "¿Cón que se va a reemplazar el petróleo venezolano en Estados Unidos?"