^^^
The reason zotan can't find the link is because it's not true. The US already processes heavy, sour crude from Venezuela, and Mexican Mayan crude, which is heavy and 3.3% sulphur (in other words, quite sour).
Analysis of crude oil types and Iranian shortage of refining capacity :: The Market Oracle :: Financial Markets Analysis & Forecasting Free Website
"As part of Chavez's "Socialist Revolution," he's implicitly and/or explicitly threatened to cut off US oil supplies; Venezuela exports roughly 1.5 million barrels of oil per day to the US, including both raw crude and oil products. That puts Venezuela behind only Canada and Mexico as a source of petroleum for the American market. In the context of the current tight global crude market, this would seem to be a significant potential problem.
Chavez has, of course, followed up this rhetoric with stunts like offering subsidized heating oil to poor in the US and even getting Joe Kennedy to front that effort. He's also talked with China and the left-leaning mayor of London about ways for Venezuela to divert more of its oil to these countries and away from the US.
But it's important to understand the myriad issues with Chavez's plan. First, much of Venezuela's crude is heavy and/or sour crude.
Oils are typically described based on two basic properties-- specific gravity and sulphur content . Without delving into too much detail, specific gravity measures the density of a substance compared to the density of pure water. According to the standard scientific definition, the specific gravity of water is 1; if a substance has a specific gravity less than 1, it's less dense than water and will float.
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This measure isn't meaningless from a refiner's standpoint. Specifically, light crude oils are simpler to refine than heavy crude oils. That's because your typical barrel of light crude oil will tend to yield a higher quantity of useful products such as gasoline per-barrel refined.
Refining light crude into gasoline is a less-complex process than refining heavy crude. Using some more-complex processes, the gasoline yield of heavy crude oils can be increased tremendously. But not all refineries can handle heavy crude economically. That is why light crudes typically trade at a premium valuation to heavy crudes.
The second key terms to understand are sweet and sour . These terms have absolutely nothing to do with taste; rather, both terms refer to the sulphur content of the crude oil. Sweet crudes are relatively low in sulphur, while sour crudes have a higher naturally occurring sulphur content.
The bottom line about all of this is that the most-commonly quoted type of crude oil is light, sweet crude. This is also one of the most-expensive, highest-quality types of crude oil on the planet.
Standard Maya crude has an API gravity of 22 degrees and a sulphur content of 3.3 percent; it's a heavy, sour crude.
Here's the problem for Venezuela: The country has no alternative market to the US for much of its crude. One useful measure in this regard is a refinery's complexity index . Refineries that are able to run heavier, more-sour feedstocks are said to be more complex than refineries that can only run light, sweet crude.
There are a few different ways to measure this, but one of the simplest is to compare a refinery's conversion capacity to its total throughput capacity . Without delving into too much detail, suffice it to say that conversion capacity is what allows a refiner to process heavy, sour crudes.
Venezuela has total refining capacity of about 1.28 million barrels of crude oil per day. The country's total conversion capacity is less than 40 percent of that amount; my crude measure of complexity stands at 38 percent. Venezuela is woefully incapable of refining even a small part of its crude domestically, so it must export that oil to countries where it can be refined.
Of course, the Venezuelan government-owned oil company, doing business as Citgo in the US, owns refineries abroad--mainly in the US mainland and in the US Virgin Islands (St. Croix). Citgo either owns outright or holds a large stake in another 1.1 million barrels per day worth of refining capacity located in the US.
The complexity index for its US-based refineries stands at 83 percent. Obviously, these refineries were set up with the express purpose of handling Venezuelan heavy crude oil imports into the US market. And, as a whole, US refineries are among the most complex in the world; it's a logical importer of Venezuela's crude.
How about those other potential markets? China has total refining capacity of about 6.25 million barrels per day. But the complexity index for these refineries is only 15.5 percent; China can't adequately refine heavy crudes, so the vast majority of Venezuelan oil exports would be useless to China."
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