* State-run company would use its own fleet for transport
* Crude purchases would reduce costs of product imports
* Venezuela has been crude exporter for last century
(Updates with comment from source, context on purchases)
By Marianna Parraga
HOUSTON, Aug 27 OPEC member Venezuela is
considering importing crude oil for the first time ever and
could use Algerian light crude as blending stock to boost sales
of its own extra heavy oil, according to an internal document
from the state-run energy company PDVSA seen by
Reuters on Wednesday.
Though Venezuela has the world's largest crude reserves,
PDVSA has been buying a growing volume of refined products such
as heavy naphtha in recent years to mix with its crude output
from the vast Orinoco belt - its largest producing region.
That is done to make the extra heavy crude exportable as
extraction of domestic medium and light crudes, which had been
used as diluents, declines.
Naphtha is currently being imported at high prices paid on
the open market and has hurt the cashflow of PDVSA, which is the
main source of revenue for the government of President Nicolas
"The (PDVSA) commerce department evaluates a strategy of
importing Saharan Blend from Algeria," said the document that
evaluated freight costs of crude imports.
PDVSA recently told its foreign partners in Venezuela that
it is holding negotiations with Algeria's state-run Sonatrach to
make purchases of crude, a source close to the companies said,
The oil company did not answer requests for comments on
possible crude purchases.
Venezuela's Petroleum minister, Rafael Ramirez, said earlier
this year that PDVSA could import crude as a "last resort" to
find diluents for its heavy crudes. But he did not elaborate on
the controversial issue.
Crude imports would be less expensive through a supply
contract when compared to costly naphtha.
In July, PDVSA launched a tender to buy at least four
500,000 barrel cargoes of heavy naphtha for September through
December and, according to traders, Petrochina and trading firms
Delaney and Noble Group were awarded with the offer.
The South American country has been an oil exporter for
almost a century. Last year it sold 2.43 million barrels per day
(bpd) of crude and products to foreign clients, according to
public PDVSA figures.
Venezuela and Algeria have been closely allied within the
OPEC in recent years, even though they have never entered a
The document said PDVSA could use its tankers in its own
fleet, including two very large crude carrier (VLCC) tankers
that recently entered service, to bring the crude over.
PDVSA has been expanding its tanker fleet to cover longer
routes to destinations such as China and India as part of a
wider strategy to reduce freight costs.
Last year, it was in talks with U.S. refiner Valero Energy
to partially restart the 235,000 barrel per day Aruba
refinery to produce heavy naphtha, but this and other attempts
to cut import costs have been unsuccessful.
Mixing its heavy crudes with a light sweet crude would
create a more marketable blend for PDVSA. Its current blend of
crude and naphtha, known as diluted crude oil (DCO), lacks
buyers and is mainly sent to its U.S. unit Citgo.
DCO production has increased as PDVSA and half a dozen
foreign partners, including U.S. Chevron, Italy's ENI
and Spain's Repsol, face delays building new
upgraders that would convert the extra heavy oil into lighter
crude with wider international demand.
The Algerian imports would bring enough diluent to Venezuela
until the new upgraders start.
Other Latin American oil producing countries are also
considering crude imports to cut pricey finished fuel purchases,
such as Mexico and Argentina.
Mexico's state-run PEMEX recently said it is also poised to
import oil, mainly condensates and light crudes, abandoning a
decades-old devotion to self-sufficiency.
Algeria's Saharan Blend, a super light sweet crude of 45 API
degrees, is usually shipped from the Arsew, Bejaia and Skikda
terminals. All three ports features single buoy mooring, at
which VLCCs and Suezmaxes can be loaded.
To transport crude from Algeria - which has plenty
inventories of this grade - to Venezuela would take some 20
days, shorter than the China-Venezuela route, and PDVSA could
save around $3 million per shipment using its own fleet,
according to the document.
After delays and problems with foreign shipyards building
new vessels, the company now has six new tankers, including
VLCCs and Suezmaxes.
These units are part of 42 vessels PDVSA ordered starting in
2006 to replace its fleet by the end of 2012. But only a few of
them have set sail.
Using its own fleet would allow PDVSA to cut freight costs
while diverting an increasing volume of oil to Asia as shipments
to North America, Latin America and Europe decline.
(Reporting by Marianna Parraga; Editing by Terry Wade and