Marathon Petroleum buys Venezuelan crude for US refineries

By Nicole Jao

NEW YORK, Feb 3 (Reuters) - Marathon Petroleum MPC.N said it bought two cargoes of Venezuelan crude oil at the end of January and expects its refineries to process more heavy grades, company executives said during a post-earnings call on Tuesday.

U.S. refiners are expected to benefit significantly from President Donald Trump's efforts to boost output in Venezuela and rebuild the country's dilapidated oil sector following the capture of President Nicolas Maduro this month.

Venezuelan crude exports have surged since Washington and Caracas reached a $2 billion supply deal last month.

Some U.S. Gulf Coast complex refineries are geared to process the heavy sour crude that Venezuela produces instead of what the U.S. produces.

"We view the access to more Venezuelan crude as positive for U.S. energy and even specifically for Marathon as well," said CEO Maryann Mannen.

LEANING INTO HEAVY CRUDE

"Right now the signals are pointing towards a heavy, more sour slate, and so we're leaning into it significantly," Chief Commercial Officer Rick Hessling said.

The refiner is running 50% sweet crudes and 50% sour crudes across its refining system.

Prices for Western Canadian Select have been the most compelling to date, Mannen said. If the economics warrant it, however, their refineries - including the 606,000-barrels-per-day facility in Garyville, Louisiana - have the ability to quickly pivot to process Venezuelan crude, she added.

Venezuelan heavy oil cargoes for delivery at the Gulf Coast were being offered at about $9.50 per barrel below benchmark Brent LCOc1 while Canadian WCS crude for delivery to the Gulf Coast was trading at a discount of about $10.25 a barrel under Brent futures.

Marathon's 631,000-bpd refinery in Galveston Bay, Texas is also capable of running Venezuelan crude.

Other refiners including Valero Energy VLO.N and Phillips 66 PSX.N have also purchased Venezuelan crude that is part of Washington's agreement with Caracas.