U.S. Ban on Key Oil Material Could Choke Venezuelan Production
- Naphtha demand seen surging if PDVSA upgraders start failing
- Costs may rise as the nation will have to buy at higher prices
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The outlook for declining oil production in Venezuela may get grimmer if the U.S. bans supply of a key commodity used to help Venezuelan crude flow from oilfields to the coast.
Production in the Orinoco oil belt, which accounts for half of the country’s output, depends on heavy naphtha imported from the U.S. to reach global markets. Naphtha is used as a diluent to reduce the viscosity of Venezuela’s tar-like extra-heavy oil, and help it flow through 62 miles of pipelines to the nation’s coast, where it can be either upgraded or exported.