US not currently considering using Venezuelan oil in exchange to fill strategic reserve, Energy Department says

By Arathy Somasekhar and Jonathan Saul

HOUSTON/LONDON, Jan 16 (Reuters) – The U.S. government is not currently considering using Venezuelan oil in an exchange with U.S. oil companies to refill the country’s Strategic Petroleum Reserve, the Department of Energy said on Friday.

Earlier on Friday, Reuters reported that two sources said the Trump administration was exploring a plan that would deliver Venezuelan oil to U.S. refineries in exchange for U.S.-produced crude. The U.S. crude would be used to help fill the SPR, the world’s largest emergency oil stockpile, which is held in a series of underground caverns on the Texas and Louisiana coasts.

“This is false,” a U.S. Energy Department spokesperson said. “We are not currently considering using Venezuelan oil to refill the SPR.”

There is also no exchange planned currently, the spokesperson said.

Venezuelan crude oil is largely denser and higher in sulfur than the crude oil in the SPR, which has long been filled with crude produced in the United States.  

The two sources said the Trump administration is looking to move the Venezuelan crude into storage tanks at the Louisiana Offshore Oil Port from where it can be shipped to refineries.

In exchange for getting Venezuelan crude, companies would supply U.S. medium sour crude directly into SPR storage, the two sources said.

After capturing Venezuelan President Nicolas Maduro earlier this month, the U.S. has said it would control the South American country’s oil sales and revenue indefinitely.

Trump pledged on the first day of his second term to fill up the emergency reserve as part of a policy to support oil and gas.

The SPR currently holds about 414 million barrels in underground salt caverns, about 60% of its total capacity. A lack of funds and ongoing maintenance at the reserve have so far limited the administration’s plan to refill crude.

U.S. Energy Secretary Chris Wright has said the Trump administration was exploring alternative approaches to replenish the reserve without direct government spending, including potential deals with private companies to supply oil.

A major tax and spending bill last year included about $171 million for SPR oil purchases and maintenance, much less than the $1.3 billion that had originally been in the legislation.

(Reporting by Arathy Somasekhar in Houston, Jonathan Saul in London, and Timothy Gardner in Washington D.C.; Editing by Nia Williams)