EXCLUSIVE-US refiners Phillips 66, Citgo seek to buy crude directly from Venezuela, sources say

By Nicole Jao, Arathy Somasekhar and Marianna Parraga

HOUSTON, Feb 18 (Reuters) - U.S. refiners Phillips 66 and Citgo Petroleum are seeking to buy heavy crude directly from Venezuelan state oil company PDVSA starting in April to maximize profits, rather than purchasing through trading houses and U.S. oil major Chevron CVX.N, according to sources familiar with the efforts.

Trading houses Trafigura and Vitol in January secured the first U.S. licenses to export Venezuelan oil as part of a $2 billion deal between Caracas and Washington. Chevron has held an authorization to operate there and ship crude since last year.

Refiners in the U.S. and other countries have been buying cargoes from the three companies. However, since U.S. President Donald Trump's administration issued a general license late last month that authorized broader oil exports from the OPEC country, the pool of buyers is expected to progressively expand, boosting trade to $5 billion over the next few months, U.S. officials have said.

Phillips 66 PSX.N, one of the biggest U.S. refiners, is seeking compliance and internal clearance to purchase directly from PDVSA, three sources said. Once the company is ready, it plans to charter tankers to load the crude at PDVSA's terminals, one of the sources added. The sources spoke anonymously because of commercial sensitivities.

A Phillips 66 spokesperson declined to comment on commercial activity but said the refiner's Gulf Coast facilities can process a wide range of crude oil and access to heavy crude presents a valuable opportunity.

The company bought Venezuelan oil from Vitol last month at about $9 per barrel below Brent crude.

The White House said on Friday the Trump administration is responding to overwhelming interest from oil and gas companies.

"The president's team is working around the clock to field requests from oil and gas companies," spokeswoman Taylor Rogers said.

CITGO, VALERO ALSO SEEK TO BUY DIRECT

Venezuela-owned U.S. refiner Citgo Petroleum is also in talks to buy crude directly from Venezuela to process at its Gulf Coast refineries, the company confirmed to Reuters.

"Citgo expects any transaction with PDVSA under (licenses) GL46 and GL47 to be fully consistent with normal commercial transactions, meaning we would pick up any crude oil or oil products from Venezuela," it added in an email, without elaborating.

Citgo in January bought a 500,000-barrel cargo of Venezuelan heavy crude for February delivery from Trafigura, its first Venezuelan crude import since 2019.

Valero, the second-largest U.S. refiner and a top buyer of Venezuelan oil from Chevron, plans to buy directly from PDVSA later in the year after it assesses the condition of Venezuela's loading infrastructure, three other sources said. The company has previously bought Venezuelan crude from Vitol for U.S. Gulf Coast delivery.

Valero is stepping up imports of Venezuelan oil with up to 6.5 million barrels of Venezuelan crude bound for its Gulf Coast refineries in March, making it the top foreign refiner of the South American nation's oil. The bulk of those purchases is expected to be through Chevron.

Many potential buyers are trying to determine the best and cheapest logistics to secure cargoes, some of them delivered at U.S. ports, but PDVSA's limited number of vessels and expensive ship-to-ship transfer fees are obstacles, two shipping sources added.

Valero and PDVSA did not reply to requests for comment. Chevron declined to comment on commercial matters, adding it continues to supply its customers. Vitol and Trafigura declined to comment on any impact on their businesses from refiners seeking to buy directly.

CHALLENGES AHEAD

The refiners' plans to increase purchases of Venezuelan oil could face challenges in the coming weeks when trade for April delivery begins, as Washington fine-tunes regulations for doing business with Venezuela, which remains under economic sanctions.

PDVSA has told potential buyers they need individual licenses or specific clearance from the U.S. Treasury's Office of Foreign Assets Control to lift cargoes at its ports, four sources said last week, while many U.S. banks have been reluctant to finance Venezuelan oil trade transactions, three sources said. Along with the general license they plan to use in the coming months, many refiners have submitted requests for individual licenses that are pending.

Venezuelan crude prices have eased in recent days as more Venezuelan oil heads to the U.S. instead of China.

Vitol and Trafigura have offered Venezuelan Merey cargoes at $10 per barrel below Brent in recent days, sources said, cheaper than prices of $6-$7.50 per barrel below Brent last month.

Vitol and Trafigura negotiated prices of around $15 per barrel below Brent for initial Venezuelan crude purchases, bringing in a first wave of $500 million in sales last month, U.S. Secretary of Energy Chris Wright told Reuters in January. They secured profits of up to $4 per barrel after transportation and storage fees, according to Reuters estimates.