Venezuela owned Citgo refinery could be hard hit by US sanctions which would erode Russia's lien on their assets

Fuel Fix:
Gulf Coast refineries could suffer a blow if the United States moves forward with sanctions against Venezuelan crude oil exports.

Many refineries in Texas and Louisiana import heavy Venezuelan crude and mix it with lighter crude oil coming out of the Permian Basin and West Texas

"Venezuela is very important for oil markets, not so much the sheer volumes but rather for the quality of their crude. Sanctions would make US Gulf coast refiners the biggest loser," said Rystad Energy analyst Paola Rodriguez-Masiu in a article published by the research firm Thursday.

White House officials previously warned U.S. refineries about the potential of sanctions and advised them to look for other sources of heavy crude. Some refineries reportedly experimented with different sources last year but many ultimately returned to Venezuelan crude.

Perhaps not surprisingly the hardest hit refiner would be Citgo Petroleum Corp., the refining arm of Petroleos de Venezuela SA, or PDVSA, the state-run oil company. Citgo, headquartered in Houston, imported about 56 million barrels of Venezuelan crude in the first 10 months of last year, according to Energy Department data.
...
Venezuela borrowed money from Russia to cover government deficit spending and Russia took a lien on its Citgo assets as security for the loan.  If Citgo is unable to operate it would lead to a potential loss of the assets and their value to Russia would also be reduced by an inability to operate.  Other Gulf Coast refineries which use the heavy crude from Venezuela would have to find alternative sources.  Canada would be one such source but its operations are limited by the ridiculous orders to stop the Keystone XL pipeline.

The best solution for the US would be for the refineries to invest in facilities that can operate solely on the light crude coming out the shale wells.  That would enhance US national security and reduce imports.

Currently, the US supply of oil and gasoline is surging.  However, the markets are wary of the loss of the Venezuelan crude.

Comments

Post a Comment

Popular posts from this blog

Should Republicans go ahead and add Supreme Court Justices to head off Democrats

Washington Post: Some Democrats eye adding more justices to the Supreme Court to change its ideological bent The once-remote idea has gained the attention of liberals angered by the GOP push to remake the federal courts. Probably the easy way to defeat this court-packing scheme is for Trump to propose doing the same thing now.  It would lead to Democrat denunciations and claims that it would be wrong, thereby blowing up any attempt by them in the unfortunate event of Democrats winning a presidential election.
Read more

29 % of companies say they are unlikely to keep insurance after Obamacare

Conn Carroll: A new survey of 368 midsize to large companies found that 29% of them are considering terminating their active employee health care plans when Obamacare is full implemented in 2014. Only 71% of employers surveyed said they did not expect to drop their health coverage, while 20% said they did not know and 9% said they were planning to exit. The latest survey, conducted by Towers Watson, echoes an ealier survey by McKinsey & Co. finding that 30% of private-sector employers were planning to drop their employee health insurance coverage by 2014. When the Congressional Budget Office crunched Obamacare's spending numbers, they estimated that only 7% of employees currently covered by employer-sponsored plans would lose their plans. ... This means the cost of the health care fiasco will be hundreds of billions more than estimated by the CBO and Congressional Democrat. It is also clear that Obama's pledge that you could keep your health care plan if you wanted t
Read more