Venezuela Sends Half Its Oil to US As It Struggles With Port Bottlenecks

Around half of Venezuela’s oil production is now being exported to the U.S., but the rapid expansion of trade is hitting a harder physical constraint: ports struggling to move crude fast enough.

U.S. Energy Under Secretary Kyle Haustveit said Venezuela was producing about 1.25mn barrels a day, with more than 500,000 bpd moving to U.S. refineries designed to process its heavier grades.

At the same time, aging terminals are forcing some tankers to wait as long as 30 days to load, creating a de facto ceiling on exports despite rising production and strong demand.

US Takes Growing Share of Output

“In the last couple of months, we're seeing north of 500,000 barrels of approximately half of the production coming out of Venezuela ⁠coming to the United States to the refineries that were built specifically for ​that crude,” Haustveit said at an event in Houston.

Venezuela’s crude exports have increased 19.7 percent this year, according to Jovanny Martinez, vice-president of state oil company PDVSA.

Martinez said production was expected to reach 1.245mn bpd by the end of August.

The trade is increasingly two-way. Haustveit said more than 100,000 bpd of U.S. naphtha was being shipped to Venezuela, where it is blended with heavier crude to support production.

Martinez said Venezuela required diluents for its heavier grades and argued that the U.S. economy needed the country’s heavy crude.

Ports Become the Binding Constraint

The production recovery has exposed severe limitations across Venezuela’s export infrastructure.

PDVSA and its partners have been unable in recent months to push exports beyond about 1.25mn bpd, despite higher output, inventory withdrawals, and strong global demand.

Tankers are facing delays caused by aging equipment, power disruptions, crude-quality problems and slow transfers from storage tanks to vessels.

“The speed of crude transfers from tanks to vessels is incredibly slow, which forces tankers to occupy ​docks for longer than their assigned loading windows,” a PDVSA source said.

The constraint is particularly visible around the Jose terminal on Venezuela’s northeastern coast, which handles roughly 70 percent of national oil exports.

Shipping reports showed repeated interruptions there this year linked to equipment failures, power outages and quality problems.

Tanker Queues Drive Up Costs

Dozens of vessels have accumulated around Venezuelan anchorages, while prolonged loading times are generating disputes over demurrage, contamination and crude specifications.

Port capacity is also being reduced by vessels left at terminals from the period of tighter U.S. restrictions.

At Guaraguao port in Puerto La Cruz, only two of seven docks were fully operational in mid-August, according to a terminal worker.

Some customers have consequently turned to alternative terminals and ship-to-ship transfer areas, where oil leaks affecting tanker hulls have created further delays and costs.

PDVSA is increasingly facing demurrage charges running into thousands of dollars when ships remain beyond their scheduled loading periods. The company has agreed to settle such charges only in crude.

Infrastructure Investment Lags Behind

The bottleneck is becoming more significant as companies prepare to market their own production shares under revised contract terms introduced through an energy reform that took effect in late July.

PDVSA is expected to retain control over terminals and cargo scheduling, keeping access to limited port capacity under centralized management.

Chevron has also sought ways to improve loading efficiency, including requesting access to ports previously reserved for domestic shipping.

Meanwhile, traders including Vitol and Trafigura have shipped more than 140mn barrels of Venezuelan crude and fuel this year under an export arrangement with the U.S., with most cargoes going to the American market and others reaching Europe and India.

The infrastructure strain contrasts with Washington’s $100bn energy reconstruction plan, which is primarily focused on increasing crude production. Terminal and refinery repairs are not being given the same priority.

Martinez acknowledged the problem in Houston.

“We are today in a phase of recovery, but the infrastructure is there,” he said. “There are deficiencies and reliability must improve.”

The result is an increasingly stark mismatch: Venezuela is producing and selling more oil, with the U.S. absorbing roughly half of output, but the terminals needed to sustain further export growth are already approaching their practical limits.