US sanctions targeting Venezuela and the planned restart of the 335k b/d Isla refinery in Curacao will be of keen interest to asphalt markets this year. Harry Sargeant IV, president of refining and asphalt trading company Global Oil Management Group (GOMG), spoke with Argus about the effects these developments will have on the asphalt markets. This interview has been edited for length and clarity.
US president Donald Trump on 26 February said he would revoke Chevron's oil waiver. How do you see relations between the US and Venezuela?
That declaration was a huge shock to me. But I wouldn't put it past Trump to use this as a political tactic for negotiating with (Venezuelan president Nicolas) Maduro. He could want more concessions out of Venezuela.
(Before this announcement), we were seeing an American-centric narrative coming forward. (US special envoy Richard) Grinnell said Trump was not interested in regime change. Venezuela is a mineral-rich country. Why sanction them? Bring them back into the American hemisphere and kick out the Russian, Iranian and Chinese influences there.
Do you think the US will ultimately renew Chevron's license?
I think it'll come down to Trump negotiating the best deal he can get. My hope is this is being used as political leverage.
I don't think we should let it get to the point where US businesses can't have an interest down there.
There are not a lot of bottoms in the US. So, if you need asphalt and you need bottoms, you need to find heavy crude somewhere, and Venezuela is the premiere producer of that kind of crude. Bring back Venezuela and put those crudes back into the US Gulf coast refining complex.
Do you anticipate any changes to your sanctions waiver following this news?
Our license is still valid, and we continue to operate. We hope it remains the same or even opens up more. Closing this off isn't the best thing for the American consumer and American taxpayer.
(Increased Venezuelan asphalt supply) is a net benefit for the US — it keeps prices down on the east coast and allows the infrastructure budget to go farther. It benefits US terminal operators and hot mix plants. To go and squash it (with sanctions) is counterproductive in my opinion.
I think one of first things you'll see happen — assuming the thawing of the US-Venezuela relationship continues — is current license holders will see some amendments come out. Maybe more licenses as well. I think some asphalt traders could get licenses if they go through a US entity.
We've seen rising asphalt exports from Venezuela — 15mn short tons since 2023, with the majority of this destined for the US, according to Kpler data. What is behind this and do you expect exports to continue to rise?
This has nothing to do with production capacity — the refinery is only running at 40pc or something like that. The infrastructure is getting fixed. (PdV) has two tanks, and another tank will probably be ready in April. By June or July, they will hit 850,000 bl/month of export capacity. Maybe all five tanks will be up by the end of the year or late third quarter.
They're also fixing up the export dock. Amuay has four piers with two loading positions each, and they are establishing a dedicated asphalt loading berth.
Does the revocation of Chevron's license affect your restart plans for the Curacao asphalt plant?
Our license for Curacao allows us to purchase Venezuelan crudes. If they're going to strip away licenses, that will weigh in our decision-making process. Not going to say that it will kill the plan, but we'd have to find other crudes and it could delay the start.
The main holdup right now is RdK confirming they have the environmental permits in place to run the facility. Once that happens, we expect another three months of repairs. So by June or July, we'll be operational and producing 1.2mn st/year.
Colombia is exporting more, Venezuelan supply is resurgent, and more companies are building ships to control their own supply. How do you see these factors changing trade flows?
You get Curacao and Venezuela pumping asphalt again, it's a whole new ballgame. Or well, the old ballgame when they were actually operational.
It will be interesting with these bigger ships. Back in the day, most ships were small. Now most are larger ships. There will definitely be a restructuring of the trade patterns. The Mediterranean arbitrage will stay closed ... and you'll see more movements west to east.
Do you think Global Oil will get into asphalt shipping?
The Sargeants ultimately in some form or fashion created the asphalt trading industry. If you look at all the traders, you can see (former employees) in all of them. No comment on if we get back into shipping, but we will have a lot of supply.
