White House told US refiners Venezuela oil sanctions under consideration
By Brian Scheid / Platts
Petroleumworld 01 17 2019
The White House National Security Council has told some US refiners that sanctions on Venezuelan crude exports are under consideration, a signal that opposition within the Trump administration to sanctions on Venezuela's oil sector may be weakening, sources familiar with the conversations told S&P Global Platts Wednesday.
While the Trump administration has sanctioned state-owned oil company PDVSA, restricting its access to new debt financing, the country's gold sector and multiple government officials, including President Nicolas Maduro, it has resisted direct sanctions on oil flows. This reluctance was due to both the potential impact on oil prices and US refiners and the fear that oil sanctions could worsen Venezuela's humanitarian crisis and place blame on the US.
But, as the situation in Venezuela drags on, John Bolton, President Trump's national security adviser, and Secretary of State Michael Pompeo have stepped up their push to target the South American nation's crude flows.
"The hawks are in charge now and they want to get tough on Venezuela," said Joe McMonigle, an analyst with Hedgeye Risk Management. "If they're going to do something, they're going to go for the toughest thing right away."
That effort would likely focus on the roughly 500,000 b/d of crude that Venezuela exports to the US, McMonigle said.
Officials with the White House NSC told some US refiners last week that sanctions on Venezuelan crude were being considered, sources said. These sources declined to identify the refiners notified.
White House spokesmen did not respond to a request for comment.
Citgo, Chevron, PBF Energy and Valero are the largest US refiners of Venezuelan crude, according to the US Energy Information Administration. Spokesmen for those four companies did not respond to requests for comment Wednesday.
In October, US refiners imported an average of 505,870 b/d of Venezuelan crude, down from about 629,480 b/d in September, but only about 5,000 b/d less than US refiners imported in October 2017.
Citgo in October imported nearly 107,400 b/d of Venezuelan crude for its Lake Charles refinery and 78,000 b/d for its Corpus Christi refinery while Chevron imported about 102,290 b/d for its Pascagoula refinery. Valero imported 63,000 b/d for its Saint Charles refinery, nearly 48,000 b/d for its Port Arthur refinery and 15,000 b/d for its Texas City refinery, while PBF imported nearly 84,000 b/d for its Chalmette refinery.
One analyst said that while sanctions on Venezuelan crude flows are "on the table," administration officials are still reluctant to impose them since they do not want to be blamed if the sanctions worsen the humanitarian crisis, but do not weaken Maduro's regime.
"With Venezuela, it's you break it, you buy it and they don't want to buy it right now," the analyst said.
In addition, Trump remains resistant to any action that could increase oil prices, a stance that led to the administration granting temporary waivers to Iran's biggest crude buyers as it reimposed sanctions on Iranian exports in 2018, source said.
One analyst said he expects the administration will likely target oil services companies in Venezuela and more individuals connected to Venezuela's energy sector before targeting crude exports.
The Trump administration is considering multiple options for Venezuela, including recognizing Juan Guaido, the leader of Venezuela's opposition-led Congress, as Venezuela's legitimate president and designating Venezuela as a state sponsor of terrorism.
"We will continue to use the full weight of United States economic and diplomatic power to press for the restoration of a Venezuelan democracy that reverses the current constitutional crisis," Bolton said in a statement January 11.
On Tuesday, EIA said Venezuela produced 1.25 million b/d of crude in December, down from 1.28 million b/d in November.
"EIA expects Venezuela's production to continue to fall through the forecast period -- albeit at a slower overall rate of decline -- while the financial situation of ... state-owned PDVSA remains extremely precarious," it said.
EIA forecasts that Venezuelan oil production will fall below 1 million b/d in the second half of 2019, according to Erik Kreil, an international energy analysis team leader with EIA.
EIA forecasts that Venezuelan oil production will drop to about 700,000 b/d in 2020, Kreil added.
We invite you to join us as a sponsor.
Circulated Videos, Articles, Opinions and Reports which carry your name and brand are used to target Entrepreneurs through our site, promoting your organization’s services. The opportunity is to insert in our stories pages short attention-grabbing videos, or to publish your own feature stories.
Story by Brian Scheid, email@example.com; Edited by Keiron Greenhalgh, firstname.lastname@example.org from Platts
spglobal.com 01 16 2019
Hit your target - Advertise with us
PW 300.000 plus request per week
Copyright© 1999-2019 Petroleumworld or respective author or news agency. All rights reserved.
We welcome the use of Petroleumworld™ (PW) stories by anyone provided it mentions Petroleumworld.com as the source.
Other stories you have to get authorization by its authors. Internet web links to http://www.petroleumworld.com are appreciated.
Petroleumworld welcomes your feedback and comments, share your thoughts on this article, your feedback is important to us!
We invite all our readers to share with us
their views and comments about this article.
Write to email@example.com
By using this link, you agree to allow PW
to publish your comments on our letters page.
Any question or suggestions,
please write to: firstname.lastname@example.org
Best Viewed with IE 5.01+ Windows NT 4.0, '95,
'98,ME,XP, Vista, Windows 7,8,10 +/ 800x600 pixels