Venezuela Crisis: Why Oil Refineries Are Smiling Behind?
…Heavy Crude Cracking Technology
“Refining Venezuelan extra-light crude oil is difficult. Only a few countries like South Korea, the United States, China, and India do that.”
Venezuelan President Nicolás Maduro has been arrested and detained following a U.S. special forces operation, and it is expected that Venezuelan oil will re-enter the market.
However, the oil extracted in Venezuela is extra-heavy crude. Extra-heavy crude has extremely high viscosity, making it sticky and non-flowing. Refining this extra-heavy crude requires sophisticated facilities, such as cracking units to break down carbon clusters and desulfurization equipment to remove sulfur.
Following the events in Venezuela, attention is turning to relatively inexpensive Venezuelan extra-heavy crude. Korean companies capable of refining extra-heavy crude, in particular, may also face new opportunities.
“U.S. secures both light and heavy crude oil … Oil prices for gasoline, diesel, and heavy fuel oil expected to become easier to control”
Chinese oil refiners have been benefiting from imports of extra-heavy crude oil from Venezuela… “Approximately 70% of Venezuela’s oil production is exported to China, while exports to the U.S. account for about 22% (2023)”
China has invested in Venezuela’s energy, telecommunications, and various other infrastructure industries. Venezuela has repaid these investments with oil, and Chinese companies have aggressively entered the Venezuelan market, gaining a firm foothold.
However, the US’s call for President Maduro’s arrest and the Venezuelan government’s declaration of cooperation with the US mean the Chinese government and companies are likely to suffer significant losses.
Particularly, U.S. intervention in Venezuela is highly relevant to the Western Hemisphere stabilization goals outlined in the National Security Strategy 2025 (NSS 2025). Therefore, the U.S. is highly likely to actively counter intervention by China, Russia, and others in the Western Hemisphere region.
The United States appears poised to control every aspect of the petroleum sector by producing gasoline and diesel fuel using light crude oil produced domestically and heavy crude oil sourced from Venezuela.
This enables not only strategic energy control management at the national level but also the ability to control consumer prices.
“Canada, Producer of Heavy Crude Oil: How Will Its Future Change?”
- Positive View: Chinese refiners’ preference for Canadian heavy crude will increase
- Negative View: U.S. refiners’ preference for Canadian heavy crude will decrease
Chinese refiners specializing in heavy crude processing may consider shifting their heavy crude imports from Venezuela to Canada. However, Canada has limited production and export capacity for heavy crude.
Canada’s heavy crude exports are primarily destined for the U.S. The U.S. may prioritize refining cheaper Venezuelan heavy crude over Canadian heavy crude. In this scenario, Canada’s crude oil production sector could suffer.
Canada also produces heavy crude oil, with most of its output exported to the United States. South Korea is also known to import some from certain refineries. Canada imports gasoline and diesel fuel from the United States.
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