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Annual Report: No. 2 Venezuela - Beyond the politicians

July 6th, 2006

While Venezuela and the United States engage in political sparring, the South American country’s trade with Houston is gaining dramatically.

In spite of political differences between the United States and Venezuelan President Hugo Chvez, total trade between southeastern Texas and the South American country grew 41 percent in 2005.

Overall trade between the two, which neared $9 billion in 2004, leapfrogged to $12.6 billion by the time last year came to a close. In the exchange, the Houston-Galveston Customs District posted a $9.6 billion trade deficit.

Although Houston’s exports to Venezuela rose more than 54 percent, they totaled only $1.5 billion while imports swelled 39 percent to $11.1 billion.

As expected, the bulk of imports came from crude oil. Houston imported $9.7 billion in crude petroleum from the OPEC country. Many of those crude oil shipments are channeled to refineries such as Lyondell-Citgo Refining, one of the largest U.S. facilities processing heavy crude with high sulfur content. The complex is part of a 13-year-old joint venture between Lyondell Chemical Co. and Citgo Petroleum Corp. Lyondell holds a 58.75 percent interest in the refinery and Citgo holds a 41.25 percent interest.

Citgo is controlled by Petrleos de Venezuela, the government-owned oil giant. In mid-2004, Citgo Petroleum moved its headquarters to Houston after spending 20 years in Tulsa.

The Lyondell-Citgo facility blankets nearly 700 acres along the Houston Ship Channel and is capable of processing approximately 268,000 barrels of crude, 120,000 barrels of gasoline and 95,000 barrels of diesel on a daily basis.

In April 2006, both Citgo and Lyondell signed a letter of intent to sell the Houston refinery. In a statement, Citgo CEO Flix Rodrguez said the company has no plans to sell its wholly owned refineries in Texas or other assets.

Refined oil was the second most valuable commodity on the Houston import roster, rising 50 percent to total nearly $888 million. Acyclic alcohols such as butanol, ethyl and hexaonol followed at nearly $141 million, an increase from almost $135 million in 2004.

Imports of iron and steel pipes for oil production reached $54 million, down 3 percent from a year earlier.

Houston also handled more than $27 million in auto part imports for automakers Ford, Toyota and Volkswagen, although that reflected a decline of 7 percent compared with 2004. Many of those imports were from Mamusa, a large Venezuelan auto parts producer with a global distribution network.

Houston is also a point of entry for rubber tires. In 2005, the Customs district brought in $12 million-worth of vehicle and airplane tires through Houston area ports.

On the export side, machinery for drilling remained an important component. Oilfield machinery parts topped the export list, valuing $269 million – just a hair below their 2004 level. The biggest export gain came in the category of ether alcohol, which closed the year at nearly $194 million, a colossal gain from just more than $5 million in 2004.

Exports of compressors and air pumps also rose – by 242 percent – to nearly $62 million. At the same time, Venezuela-bound shipments of iron tubes and pipes supplied by companies such as Schlumberger and Halliburton jumped 192 percent to nearly $58 million.

Aside from oil and gas equipment, Houston exported $45 million in wheat to the South American country, a gain of nearly 112 percent from a year earlier. The Houston-Galveston Customs District also handled more than $31 million in jet parts headed to Venezuela, an increase of almost 290 percent.