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Oil Conundrum

by Delinda Karle

U .S. Commerce Department trade figures for 2005 put Venezuela squarely atop the list of top crude oil suppliers to the United States, displacing both Saudi Arabia, No. 1 in 2004, and Canada, formerly No. 2.

Commerce figures, which are based on the value of shipments, show Venezuela shipping nearly $25.6 billion worth of crude to the United States during 2005, up a whopping 40% over 2004. Saudi Arabia ranked second, with U.S. imports from that country reaching nearly $24.8 billion. Canada came in third at $24.4 billion.

Industry experts, however, are skeptical.

“There’s something squirrelly about the statistics,” says Bill O’Grady, an oil analyst with A.G. Edwards & Sons in St. Louis. “Looking at the numbers, there is something there that is not evident. I would believe it if Venezuela were No.1 in terms of all petroleum products, but not just crude oil.”

The Commerce Department would not comment on the statistics except to refer inquiries to the U.S. Bureau of Census, where the Commerce Department gets its data. Reba Higbee, a spokeswoman for the bureau’s data section, says Commerce Department statistics include crude petroleum testing under 25 degrees API, or lower quality crudes, as well as crude petroleum testing over 25 degrees API, or higher quality crudes. It also includes what the industry calls “lease condensate,” a liquid that sometimes comes out of gas wells.

O’Grady and other oil industry analysts say they normally watch the statistics of the Department of Energy’s Energy Information Administration, which tracks crude oil imports based on volume. EIA categorizes crude oil much the same way as the Commerce Department and includes lease condensate in its figures, says EIA analyst Mike Conner.

Ronald Planting, manager of information and analysis for the American Petroleum Institute, says he is surprised by the surge noted in Commerce Department data. “I’ve learned over the years that the Department of Energy reflects what’s going on, and we don’t see any changes there.”

While the EIA’s statistics for 2005 have not been released yet, its figures through November 2005 show that Canada shipped nearly 540.8 million barrels to the United Sates during the first 11 months of the year, more than any other country. Mexico came in second by sending 513 million barrels, according to EIA data, followed by Saudi Arabia with 480.1 million barrels.

The Energy Department figures show Venezuela sending 412.5 million barrels of crude to the United States during the first 11 months of 2005, down from almost 431.8 million during the same period in 2004.

Considering that Venezuela’s crude oil is usually lower quality crude, meaning that it doesn’t command as much money as higher-quality crude from Saudi Arabia, it’s hard to imagine it would come out on top when looking at crude imports tracked by value, EIA analysts note.

“I’m sort of at a lost to explain it,” says Doug MacIntyre, a senior EIA analyst.

Conner said the clash of statistics could be explained by how the data is collected. The Census Bureau gets its information from U.S. Customs and Border Protection documents. The EIA uses reports filed by companies importing crude oil or petroleum products.

In addition, the Commerce Department statistics include $5.3 billion as imports through the U.S. Virgin Islands where, in St. Croix, Venezuelan state oil company PDVSA has a 50 percent interest in the refinery Hovensa. EIA statistics do not include U.S. Virgin Island imports. However, the EIA’s Conner says those imports still would not be enough to put Venezuela at the top of his agency’s statistics.

Both the EIA and the Commerce Department will revise their statistics later in the year. MacIntyre says the EIA revisions normally don’t change the overall results.

O’Grady suspects that the Commerce’s crude oil statistics may include some refined products, such as gasoline, which was in high demand after the 2005 hurricanes and which was bringing in high prices.

“I don’t know how they would get to that [$25.6 billion] number without adding in some [other] petroleum products,” he says.

Black gold

Venezuela sits on one the world’s largest pools of heavy crude and PDVSA is the country’s economic driver. The government oil company also owns Citgo Petroleum Corp., one of the largest refiners and marketers of petroleum products in the United States. The current global thirst for oil has filled treasury coffers in the South American country.

Most of Venezuela’s crude shipments to the United States arrive on tankers through the Port of Houston. Traditionally U.S. petroleum imports into South Florida are confined to gasoline, jet fuel and other refined products. Virtually every shipment arrives through Port Everglades. For the most part, the Port of Miami does not handle energy imports.

In South Florida, the value of petroleum imports in 2005 rose 105 percent to total $3.2 billion. However, Phillip Allen, the new Port Everglades director, says the volume of petroleum products shipped through the Fort Lauderdale port increased only 5 percent last year. He also notes that the port saw a shift in the sources of those shipments.

“The mix changed last year,” says Allen. “We started to see more foreign refined products coming in, especially from places like Venezuela.”

He says the shipments were in response to port disruptions in the Gulf of Mexico following Hurricane Katrina. He predicts that trend will continue at least six months until damaged Gulf Coast refineries are back in operation.