Trump administration weighs oil embargo on Venezuela to oust Maduro

[corbe]

Trump administration weighs oil embargo on Venezuela to oust Maduro

by Josh Siegel
January 26, 2019 12:00 AM
 
The Trump administration, fed up with the authoritarian government in Venezuela, could soon play its last hand and block imports of the country’s oil, a move that would upset Gulf Coast refiners and pressure energy markets.

“The likelihood of significant sanctions including an import ban is higher now than it ever has been during the Trump administration," George David Banks, President Trump's former international energy adviser, told the Washington Examiner.

Banks said the Trump administration has long debated restricting oil from Venezuela, whose heavy crude is used in large amounts by refiners in Texas and Louisiana such as Citgo and Valero.

<..snip..>

https://www.washingtonexaminer.com/policy/energy/trump-administration-weighs-oil-embargo-on-venezuela-to-oust-maduro

[Absalom]

Trump administration weighs oil embargo on Venezuela to oust Maduro

by Josh Siegel
January 26, 2019 12:00 AM
 
The Trump administration, fed up with the authoritarian government in Venezuela, could soon play its last hand and block imports of the country’s oil, a move that would upset Gulf Coast refiners and pressure energy markets.

“The likelihood of significant sanctions including an import ban is higher now than it ever has been during the Trump administration," George David Banks, President Trump's former international energy adviser, told the Washington Examiner.

Banks said the Trump administration has long debated restricting oil from Venezuela, whose heavy crude is used in large amounts by refiners in Texas and Louisiana such as Citgo and Valero.

<..snip..>

https://www.washingtonexaminer.com/policy/energy/trump-administration-weighs-oil-embargo-on-venezuela-to-oust-maduro

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Venezuela's survival is tied to oil.
A wise Man, which Trump emphatically is not, would have done this long go.

[IsailedawayfromFR]

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Venezuela's survival is tied to oil.
A wise Man, which Trump emphatically is not, would have done this long go.

kinda self-serving for a NT there.  Put any name in his place and it would also be the same.

[DB]

It is my understand that Venezuelan crude is pretty rough stuff that is difficult to refine. That we built at least one large refinery specifically to refine this crude. If you stop the flow of this crude the refinery will have to shut down and that's no small thing causing multiple disruptions from gas supplies to job losses here and a lot of pain/losses to the owners of the refinery. As always nothing is simple.

It may be worth it if it really gets rid of Maduro, especially if it prevents a war. At a minimum the refinery here needs some compensation/help with advanced planning to keep it alive so that when Maduro is gone it can continue to refine Venezuelan crude helping what follows Maduro.

[Absalom]

It is my understand that Venezuelan crude is pretty rough stuff that is difficult to refine. That we built at least one large refinery specifically to refine this crude. If you stop the flow of this crude the refinery will have to shut down and that's no small thing causing multiple disruptions from gas supplies to job losses here and a lot of pain/losses to the owners of the refinery. As always nothing is simple.

It may be worth it if it really gets rid of Maduro, especially if it prevents a war. At a minimum the refinery here needs some compensation/help with advanced planning to keep it alive so that when Maduro is gone it can continue to refine Venezuelan crude helping what follows Maduro.

------------------------
True; as Venezuelan oil is mostly 'sour/less pure' refining is more expensive. So what!
As the oil is their's, let them finance the refinery! It's called responsibility and self-reliance.
What a concept huh?????

[dfwgator]

The failure of this attempted coup in Venezuela could be an even bigger embarrassment for Trump than the Wall thing.

[DB]

The failure of this attempted coup in Venezuela could be an even bigger embarrassment for Trump than the Wall thing.

Has it officially failed?

[thackney]

It is my understand that Venezuelan crude is pretty rough stuff that is difficult to refine. That we built at least one large refinery specifically to refine this crude. If you stop the flow of this crude the refinery will have to shut down and that's no small thing causing multiple disruptions from gas supplies to job losses here and a lot of pain/losses to the owners of the refinery. As always nothing is simple.

It may be worth it if it really gets rid of Maduro, especially if it prevents a war. At a minimum the refinery here needs some compensation/help with advanced planning to keep it alive so that when Maduro is gone it can continue to refine Venezuelan crude helping what follows Maduro.

More than one US Gulf Coast refinery brings in heavy, sour crude from Venezuela.  But Venezuela is not the only supplier of heavy sour.  Canada Oil Sands, we just need more pipelines to bring it down.

https://www.bloomberg.com/news/articles/2019-01-23/venezuela-oil-sanctions-likely-to-hit-some-u-s-refiners-hard

[DB]

More than one US Gulf Coast refinery brings in heavy, sour crude from Venezuela.  But Venezuela is not the only supplier of heavy sour.  Canada Oil Sands, we just need more pipelines to bring it down.

https://www.bloomberg.com/news/articles/2019-01-23/venezuela-oil-sanctions-likely-to-hit-some-u-s-refiners-hard

Thank you for detailing the different crude grades and where they come from and get refined and the actual impacts.

[IsailedawayfromFR]

More than one US Gulf Coast refinery brings in heavy, sour crude from Venezuela.  But Venezuela is not the only supplier of heavy sour.  Canada Oil Sands, we just need more pipelines to bring it down.

https://www.bloomberg.com/news/articles/2019-01-23/venezuela-oil-sanctions-likely-to-hit-some-u-s-refiners-hard

It is an easy switch if we just get the pipelines from Canada.

And I do not feel overly sympathetic to the refineries which use the heavy crude.

Years ago, some bet the entire industry was going that way and there would be less access to the higher quality stuff.

They also bet that cars would be going diesel to get the gasoline mileage increase.

They bet wrong after spending billions to reconfigure.

[rustynail]

A Federal Judge will have the Last Word on this.

[thackney]

It is an easy switch if we just get the pipelines from Canada.

And I do not feel overly sympathetic to the refineries which use the heavy crude.

Years ago, some bet the entire industry was going that way and there would be less access to the higher quality stuff.

They also bet that cars would be going diesel to get the gasoline mileage increase.

They bet wrong after spending billions to reconfigure.

They make gasoline from that heavy crude.  They did not bet "wrong".  They spent more capital to run for decades on cheaper oil.

[IsailedawayfromFR]

They make gasoline from that heavy crude.  They did not bet "wrong".  They spent more capital to run for decades on cheaper oil.

Sure you can make gasoline from heavy crude.  You can also make it from coal or natural gas, but it would also be more expensive. If it is costs you more to make it that way, I say it is wrong bet, at least for the present.

I worked for one of the heavy hitters in refining years ago and witnessed them strategically retrofitting refineries to accept heavy crude and to make diesel.  We lost billions as the diesel demand did not occur.  And we were not alone.

Let the refineries who are configured for heavy crude accept more feedstock costs or they can reconfigure back to the lighter crudes.
That is why those companies employ some highly-paid strategists within the companies to make decisions.

It is called a free market.

[thackney]

Sure you can make gasoline from heavy crude.  You can also make it from coal or natural gas, but it would also be more expensive. If it is costs you more to make it that way, I say it is wrong bet, at least for the present.

I worked for one of the heavy hitters in refining years ago and witnessed them strategically retrofitting refineries to accept heavy crude and to make diesel.  We lost billions as the diesel demand did not occur.  And we were not alone.

Let the refineries who are configured for heavy crude accept more feedstock costs or they can reconfigure back to the lighter crudes.
That is why those companies employ some highly-paid strategists within the companies to make decisions.

It is called a free market.

The delta in the price between heavy and light has made Valero and others a lot of money being able to turn heavy, sour crude into gasoline along with other fuels.

[IsailedawayfromFR]

The delta in the price between heavy and light has made Valero and others a lot of money being able to turn heavy, sour crude into gasoline along with other fuels.

Yes they have.  So they need to do like you and I would do, ie - bank some of the money made in order to make any necessary changes for the future.

We should not bow to take Venezuelan crude in order to keep Valero's balance sheet robust.

[thackney]

Venezuela Sanctions Will be Weaker Than Expected
https://www.rigzone.com/news/venezuela_sanctions_will_be_weaker_than_expected-30-jan-2019-158036-article/
January 30, 2019

...“Administration officials reportedly said the sanctions would result in more than $11 billion in export losses for Venezuela over the next year, but I believe this figure will be substantially lower,” Rodriguez-Masiu said in a statement sent to Rigzone.

“The oil that Venezuela currently exports to the United States will be diverted to other countries and sold at lower prices. For countries like China and India … [Monday’s] news was akin to Black Monday. They will be able to pick up these oil volumes at great discounts,” the Rystad Energy analyst added.

In the statement, Rodriguez-Masiu warned that the sanctions will affect refinery margins in the United States and said U.S. refiners “will be amongst the biggest losers”....

[IsailedawayfromFR]

This article a few months ago predicted heady profits coming for refiners for several reasons, including the requirement for shipping fuel emissions reduction.

These guys are ok.

https://www.houstonchronicle.com/business/energy/article/Refiners-rake-in-big-profits-for-now-13123470.php

[DB]

Venezuela Sanctions Will be Weaker Than Expected
https://www.rigzone.com/news/venezuela_sanctions_will_be_weaker_than_expected-30-jan-2019-158036-article/
January 30, 2019

...“Administration officials reportedly said the sanctions would result in more than $11 billion in export losses for Venezuela over the next year, but I believe this figure will be substantially lower,” Rodriguez-Masiu said in a statement sent to Rigzone.

“The oil that Venezuela currently exports to the United States will be diverted to other countries and sold at lower prices. For countries like China and India … [Monday’s] news was akin to Black Monday. They will be able to pick up these oil volumes at great discounts,” the Rystad Energy analyst added.

In the statement, Rodriguez-Masiu warned that the sanctions will affect refinery margins in the United States and said U.S. refiners “will be amongst the biggest losers”....

Well if China and others tool up to process Venezuelan crude and then Maduro is suddenly gone their investment may not pay off.

[IsailedawayfromFR]

Well if China and others tool up to process Venezuelan crude and then Maduro is suddenly gone their investment may not pay off.

Venezuela is one country where investments are always placed at risk.

[corbe]

Daily on Energy: US refiners in a 48-hour frenzy over confusing Venezuelan sanctions rules

by John Siciliano & Josh Siegel

January 31, 2019 11:57 AM

US REFINERS IN A 48-HOUR FRENZY OVER CONFUSING VENEZUELAN SANCTIONS RULES: The refinery industry has been in the throes of a non-stop lobbying frenzy over the last two days trying to get clarification from the Trump administration on the licensing requirements for continuing to import Venezuelan oil after sanctions were imposed on Monday.

“I know for a fact that they’re talking non-stop every day on this,” said one industry lobbyist close to the meetings.

Another industry source called it a crazed lobbying spree to figure out what the administration’s licensing rules mean for the month-long ratcheting down of sanctions.

The rub has to do with Treasury’s licensing rule 12 that outlines the wind-down period for sanctions. Industry sources tell John that there is a difference of interpretation among industry on how the rule applies to continuing oil imports, and the administration cannot yet give them a clear answer to remove the confusion.

The rule pertains to importing oil from the OPEC nation in the immediate aftermath of Treasury’s Jan. 28 sanctions roll-out, and to what needs to happen once the wind-down period ends on Feb. 28.
 
<..snip..>

https://www.washingtonexaminer.com/daily-on-energy-us-refiners-in-a-48-hour-frenzy-over-confusing-venezuelan-sanctions-rules

[thackney]

Trump’s Venezuela Sanctions Put Russian Billions at Risk
https://www.bloomberg.com/news/articles/2019-01-31/oil-sanctions-ratchet-up-pressure-on-sechin-s-big-venezuela-bet

As U.S. sanctions against Venezuela’s state oil company ripple through the market, there’s one company with more at stake than most: its Russian counterpart, Rosneft PJSC.

Rosneft Chief Executive Officer Igor Sechin has personally spearheaded Russia’s support for President Nicolas Maduro’s government and over the past five years, the Russian oil company has funneled more than $7 billion in Venezuela, largely through loans to be repaid in future crude deliveries....

...Rosneft has stakes in five onshore oil projects in Venezuela, which it co-owns with Petroleos de Venezuela SA, as well as two offshore gas projects. The oil projects produced 8.06 million tons in 2017, of which Rosneft’s share was 3.14 million tons, or about 60,000 barrels a day -- around 1.3 percent of the Russian company’s crude production.

The loans Rosneft gave Venezuela’s state oil company are much more financially significant to the Russian company. In 2014, Rosneft made $4 billion in prepayments to PDVSA in exchange for future oil deliveries; in 2016-17, the Russian company added a further $2.5 billion to the total....

[thackney]

https://www.bradenton.com/entertainment/article225332565.html

2:30 p.m.

A key U.S. customer for Venezuelan oil says it has stopped importing crude from the South American country due to recently imposed U.S. sanctions.

Valero Energy Corp. said it stopped taking deliveries of Venezuelan crude oil after the Trump administration slapped sanctions on Venezuela's state-owned oil company, Petroleos de Venezuela S.A.

Valero Senior Vice President Gary Simmons said the San Antonio, Texas, refinery is focused on finding an alternative to cover its next 30-day supply plan. Simmons said Venezuela has supplied 20 percent of the heavy sour crude the company runs in its refineries....