Venezuela Confirms It's Now Importing Oil

International Business Times

Published Oct 21, 2014 11:15AM ET

Updated Oct 21, 2014 12:01PM ET

Venezuela Confirms It's Now Importing Oil

By Brianna Lee - Venezuela’s state-owned oil company confirmed this week that it was set to receive its first shipment of light crude oil from Algeria. This marks the first-ever import of oil for Venezuela, which has the largest oil reserves in the world and is the ninth-biggest oil producer. 

Venezuela's exports of oil extracted by state-owned Petroleos de Venezuela S.A. (PDVSA) make up the government’s largest source of revenue. But oil production has declined over the years, exacerbating the country’s problems with a limited foreign currency supply, and critics say mismanagement of PDVSA is largely to blame. Meanwhile, global oil prices have slipped by more than 25 percent since June. 

Venezuela produces mostly a type of oil known as extra heavy crude, which necessitates the addition of light crude in order to make it more exportable. Venezuela had been buying naphtha as a diluent in recent years, as domestic stocks of light and medium crude oil have dwindled. But PDVSA began considering using imported crude as a cheaper alternative to buying naphtha at its current high prices. The imported light crude form Algeria will be used as a diluent instead, PDVSA said.

Then-energy minister Rafael Ramirez said earlier this year that importing crude would be a “last resort.”