Venezuela Shifts Oil Ventures’ Accounts To Russian Bank, PDVSA’s Move Comes After The United States Imposed New Financial Sanctions

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By Corina Pons | Stock.Market@News.Today

Venezuela’s state-run oil company PDVSA is telling customers of its joint ventures to deposit oil sales proceeds in an account recently opened at Russia’s Gazprombank. PDVSA’s move comes after the United States imposed tough, new financial sanctions on Jan. 28 aimed at blocking Venezuela’s President Nicolas Maduro’s access to the country’s oil revenue.

Supporters of Venezuelan opposition leader and self-proclaimed interim president Juan Guaido said recently that a fund would be established to accept proceeds from sales of Venezuelan oil. The United States and dozens of other countries have recognized Guaido as the nation’s legitimate head of state. Maduro has denounced Guaido as a U.S. puppet seeking to foment a coup.

Today’s Stock Market News – Venezuela Shifts Oil Ventures’ Accounts To Russian Bank
Today’s Stock Market News – Venezuela Shifts Oil Ventures’ Accounts To Russian Bank

PDVSA also has begun pressing its foreign partners holding stakes in joint ventures in its key Orinoco Belt producing area to formally decide whether they will continue with the projects, according to two sources with knowledge of the talks. The joint venture partners include Norway’s Equinor ASA, U.S.-based Chevron Corp and France’s Total SA.

“We would like to make formal your knowledge of new banking instructions to make payments in U.S. dollars or euros,” wrote PDVSA’s finance vice president, Fernando De Quintal, in a letter dated Feb. 8 to the PDVSA unit that supervises its joint ventures.

Even after a first round of financial sanctions in 2017, PDVSA’s joint ventures managed to maintain bank accounts in the United States and Europe to receive proceeds from oil sales. They also used correspondent banks in the United States and Europe to shift money to PDVSA’s accounts in China.

State-run PDVSA several weeks ago informed customers of the new banking instructions and has begun moving the accounts of its joint ventures, which can export crude separately. The decision was made amid tension with some of its partners, which have withdrawn staff from Caracas since U.S. sanctions were imposed in January.

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The sanctions gave U.S. oil companies working in Venezuela, including Chevron and oil service firms Halliburton Co, General Electric Co’s Baker Hughes and Schlumberger NV, a deadline to halt all operations in the South American country.

The European Union has encouraged member countries to recognize a new temporary government led by Guaido until new elections can be held. Europe also has said it could impose financial sanctions to bar Maduro from having access to oil revenue coming from the region. Maduro has overseen an economic collapse in the oil-rich OPEC country that has left many Venezuelans malnourished and struggling to find medicine, sparking the exodus of an estimated 3 million Venezuelans.

Sanctions designed to deprive Maduro of oil revenue have left an armada of loaded oil tankers off Venezuela’s coasts that have not been discharged by PDVSA’s customers due to payment issues. The bottleneck has caused problems for PDVSA to continue producing and refining oil without imported diluents and components.

PDVSA also ordered its Petrocedeno joint venture with Equinor and Total to halt extra-heavy oil output and upgrading due to a lack of naphtha needed to make the production exportable, as the sanctions prohibit U.S. suppliers of the fuel from exporting to Venezuela.

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Major Global Powers Ordered To Stop Trading Oil And Gold Assets With The Venezuela

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Venezuela crisis – Major global powers ordered to stop trading oil and gold assets with Maduro

By Andry Roskyeva | StockMarketNews.Today |

A coalition group of Latin American countries and Canada has urged the Venezuelan military to sever ties with President Nicolas Maduro.

In a statement published Monday, 11 of the 14 members of the Lima Group called for a “peaceful transition through political and diplomatic means without the use of force.”

The group also underscored the need for an urgent delivery of humanitarian aid and insisted international governments “take measures to prevent the Maduro regime … from doing business in oil, gold and other assets.”

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Major global powers, including the U.S., have publicly recognized opposition leader Juan Guaido as Venezuela’s legitimate interim president.

Guaido’s declaration as the rightful leader of the South American country takes Venezuela into uncharted territory. That’s because there is now an internationally recognized opposition — without control over state functions — running a parallel government to Maduro.

At the start of January, Maduro was sworn in for a second term. It followed an election marred by an opposition boycott and claims of vote-rigging. The result prompted a fresh wave of anti-government demonstrations in the capital city of Caracas, with thousands of protestors seen marching in support of Guaido over the weekend.

The Lima Group was set up in 2017 with the aim of finding a peaceful solution to Venezuela’s deepening economic and humanitarian crisis. On Monday, it published a 17-point declaration following a meeting in Ottawa, Canada.

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The document says the governments of Argentina, Brazil, Canada, Chile, Colombia, Costa Rica, Guatemala, Honduras, Panama, Paraguay and Peru “reiterate their recognition and support for Juan Guaido.”

In addition to condemning the “persistent and serious violations of human rights in the country,” they also “called upon the National Armed Forces of Venezuela to demonstrate their loyalty to the interim president in his constitutional functions as their Commander in Chief.”

Canadian Prime Minister Justin Trudeau also announced $53 million in new funding to support people in Venezuela. The aid package is designed to help the three million refugees who have fled the crisis in recent years. Mexico, Guyana and Saint Lucia were the only Lima Group members not to be included on the statement.

Speaking to Spanish television on Sunday, Maduro — who maintains the backing of China and Russia, amongst others — claimed interference in domestic affairs from overseas could lead to civil war. “Everything depends on the level of madness and aggressiveness of the northern empire (the U.S.) and its Western allies.”

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“We ask that nobody intervenes in our internal affairs … And we prepare ourselves to defend our country,” he said, in an interview broadcast on the channel La Sexta. Growing unrest in Venezuela follows years of economic mismanagement, repression and corruption.

Millions of people have been driven out of the country amid hyperinflation, power cuts and severe shortages of basic items — such as food and medicine.


The deepening turmoil in Venezuela is exacerbating a shortfall of crude oil. Venezuela’s oil occupies a special niche to U.S. refiners’ operations

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Venezuela Shortfall Of Crude Oil

By Stephanie Yang and Rebecca Elliott | WSJ.COM

The deepening turmoil in Venezuela is exacerbating a shortfall of dense crude oil, leaving fuel makers in the lurch and underscoring the limitations of U.S. shale.

On Monday, the U.S. imposed sanctions on Venezuela’s state-owned oil giant in an attempt to prevent the proceeds of crude sales to the U.S. from reaching the government of President Nicolás Maduro.

That measure threatens the delivery of more than 500,000 barrels a day of Venezuelan oil to the U.S. Venezuela is the U.S.’s second-largest source of crude imports. While those shipments have roughly halved over the last decade, U.S. producers still will be hard pressed to fill the growing void.

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Venezuela Shortfall Of Crude Oil

That is because U.S. shale companies, whose output surpassed expectations and reached record levels last year, produce a crude that is low in sulfur—or “sweet”—and has a low density—“light” in industry parlance. Light, sweet crude is abundant in the U.S., compared with the “heavy,” or dense, oil that countries such as Venezuela provide.

Many American refineries are configured to process a mix of heavy and light barrels and need both kinds to produce fuels like gasoline and diesel efficiently. “The short-term situation could get pretty serious,” said Sandy Fielden, director of oil research for Morningstar Inc. “We’ll see prices for heavier crudes spiking up as any shortage occurs.”

Falling supplies from Venezuela and other exporters, combined with upbeat economic data, pushed U.S. crude-oil futures to a two-month high of $55.26 a barrel last week.

The sanctions on Petróleos de Venezuela SA, or PdVSA, come at a time when heavy crude oil is becoming more scarce. Production in Venezuela has plunged 45% since 2014 amid political and economic turmoil. Canada, another major producer of heavy crude, has experienced severe pipeline bottlenecks that have led to mandated production curbs. Other countries that produce dense crude oil, such as Mexico and Saudi Arabia, have seen their output decline recently as well.

“There are not a lot of countries around that world that have heavy crude,” said Devin Geoghegan, global director of petroleum intelligence at data provider Genscape Inc. By choking off an important oil channel, the sanctions could stifle output from U.S. refiners, which in the past year have churned out record amounts of gasoline supplies, leading to low prices at the pump.

Citgo Petroleum Corp., a PdVSA subsidiary, and Valero Energy Corp. were the two largest U.S. importers of Venezuelan crude last year, according to the U.S. Energy Information Administration, and likely would be hit hardest by a reduction in supplies. They were followed by Chevron Corp. and PBF Energy Inc.

On Thursday, Valero said it was no longer purchasing oil from the country. The company has put alternatives in place and is looking to maximize its intake of lighter, less sulfurous crude, Gary Simmons, a senior vice president, told investors. “But we still have some holes to fill in our supply plan,” Mr. Simmons said. Chevron told investors on Friday that it is pursuing contingency plans.

The Trump administration has played down the domestic impact of the sanctions, with Treasury Secretary Steven Mnuchin saying Monday that the measures would have minimal effect on U.S. gasoline prices. In the near term, plentiful gasoline supplies can help cushion the blow of more-expensive crude. Last week, gasoline futures jumped 2.3%, and diesel futures advanced 1.4%.

“The impact of a Venezuelan crude shortage should have a muted effect on gasoline and diesel prices at least until spring and some of the excess inventory is worked off,” said Charles Kemp, a vice president at energy consulting firm Baker & O’Brien Inc.

But analysts warn that a prolonged shortage of heavy crudes would push refiners to choose between paying a premium for heavy oil and cutting their processing rates. “That will translate necessarily into higher gasoline prices,” Rystad Energy analyst Paola Rodriguez-Masiu said.

As of Thursday, Mexico’s Maya crude, a heavy blend, was trading less than a dollar below Louisiana Light Sweet crude, a Gulf Coast benchmark, compared with an average discount of more than $7.50 last year, according to S&P Global Platts.

Historically, lighter crude has traded at a premium to heavier grades, since it takes less processing to transform it into products like gasoline and diesel. But differences in price between the types have narrowed in recent months as heavy-crude supplies have come under pressure.

Sanctions on Iranian oil sparked worries about dwindling global supplies of heavier crudes last year, before the Trump administration issued waivers in November for countries to continue buying without penalty for 180 days.

Ultimately the sanctions against Venezuelan oil could lead to even steeper reductions in the country’s production, causing a widespread shortage of heavy crude in the global market.

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“The optimistic notion that Venezuelan oil will just go somewhere else is potentially a problem,“ said Robert Campbell, an analyst at research consulting firm Energy Aspects. “There’s an understanding in the industry that the reach of U.S. sanctions goes well beyond U.S. borders.”


Venezuela Oil Sanctions Likely to Hit Some U.S. Refiners. Profit margins for turning heavy crude into gasoline and diesel have slumped to the lowest level in more than a year


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By  | Jennifer A Dlouhy

Refiners in Texas and Louisiana would be hard hit by sanctions on Venezuelan crude under consideration at the White House, a move that would leave U.S. oil companies struggling to find alternative supplies.

President Donald Trump recognized Juan Guaido as the interim president of Venezuela on Wednesday in the most provocative move yet against the leftist regime of Nicolas Maduro. Maduro responded by breaking diplomatic relations with the U.S., giving American diplomats 72 hours to leave the country.

The Trump administration has drafted a slate of sanctions but hasn’t decided whether to deploy them, said people familiar with the matter. Earlier this month, White House officials warned U.S. refiners that sanctions were being considered, and advised them to seek alternative sources of heavy crude. Some U.S. refiners worried about sanctions experimented with alternatives last year before ultimately returning to Venezuelan crude.

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The hardest-hit would be Citgo Petroleum Corp., the refining arm of Petroleos de Venezuela SA, or PDVSA, the state-run oil company. Citgo imported the most Venezuelan crude in the first 10 months of 2018, followed by Valero Energy Corp.

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Royal Dutch Shell Plc and Phillips 66 haven’t processed Venezuelan crude in their U.S. refineries since the U.S. imposed financial sanctions against the country and PDVSA in August 2017. Marathon Petroleum Corp., Total SA and Motiva Enterprises LLC cut intake by more than a half during that period, and as Venezuelan oil production slumped to the lowest levels seen since the 1940s.

Oil companies have urged the Trump administration not to limit imports of Venezuelan oil, warning the action could disadvantage Gulf and East Coast refiners designed to handle the country’s heavy crude, while also causing gasoline prices to rise.

Shutting off Venezuela imports would exacerbate a drought of the heavy, high-sulfur oil that’s preferred by Gulf Coast refiners and normally sells at a discount to higher-quality crude. Prices are already surging, after OPEC and its allies cut supply and the Canadian province of Alberta forced producers to do the same to stem global and regional gluts. Mars Blend crude rose to a five-year high versus the U.S. benchmark Wednesday, according to data compiled by Bloomberg, while the profit margin for processing Mexican Maya oil sank to the lowest in four years.

Alternatives aren’t readily available. Mexico, whose production is mired in a prolonged slump, has already increased shipments to the U.S. Gulf, surpassing Venezuela last year as the region’s top supplier. Meanwhile, Ecuadorean and Colombian crude often heads to the U.S. West Coast, leaving American refiners competing with each other.

Refiners have told allies in the White House and on Capitol Hill that a unilateral crude oil ban will disadvantage U.S. refiners without advancing U.S. policy objectives in Venezuela, because India, Russia and China will continue buying the country’s oil, according to two people familiar with the discussions.

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Profit margins for turning heavy crude into gasoline and diesel have slumped to the lowest level in more than a year. If refiners can’t find affordable replacements for Venezuelan oil, they may be forced to reduce production rates, according to a person familiar with the matter. That could push up fuel prices, something that the U.S. president has been particularly sensitive to.