June 9, 2008 at 1:20 pm #3587
Citgo Having Tough Time
04.06.2008 10:07 Neftegaz.RU website
Citgo Petroleum Corp. is off to its worst year in perhaps more than a decade as record oil prices cut into profits for its primary business of refining and selling gasoline and other fuels, Chief Executive Alejandro Granado said Tuesday in Houston.
“This year, even though the price at the pump is almost $4, this has been the worst year at Citgo Petroleum at least for the last 10 years,” Granado said during a speech at a company event to promote greater diversity among its vendors.
Citgo, the Houston-based arm of Venezuela’s state-controlled oil company, Petróleos de Venezuela, has struggled along with many other refiners as crude prices have doubled since last year and fuel prices have not kept pace.
First-quarter combined refining profits at 11 major U.S. energy companies declined 83 percent, to $800 million, from $4.8 billion in the first three months of 2007, according to a report by the Energy Department’s Energy Information Administration.
The report cited higher crude oil and operating costs, refinery outages, reduced sales and other factors for the decline.
June 9, 2008 at 1:34 pm #6797
Here is short version of Citgo / PDVSA news article from Negthzu.Ru
As far as Citgo’s worse profit hit decade – there are a lot refineries that are going take earnings hit this year given all delta in crude price due speculation, and demand destruction the +$3.60/gal price his taking since it appears to have crossed that mental threshold for consumers to take action. <Saw article that 90% US consumers are now changing buying habits – moving closer work (-19 miles vs. suburban) / buying smaller cars / less out state holidays / saving less /ect.
There are 5 airlines closed last 6 months, AA worlds largest is cutting 75 jets & routes & jobs, and military charging ahead with Coal to Liquid plants at Fed bases (will be -20% jet market from US refineries sales) due hightened security drivers. There are 1000 trucking companies stopping shipments & over 10,000 trucks are parked in Chicago area due high cost diesel causes them operate at loss……. Oh S***t factor is high now & refineries failing to take-on speculation & make Congress do something (besides lip service investigation – watch what great job Food industry is doing about corn/speculation/ethanol impacts).
Back on Chavez/PDVSA – I think they and Citgo are in lose/lose position. The impact from ExxonMobil stopping crude flow from Cerro Negro has PDVSA trying to get Operational Control because it cannot place that volume for anywhere near the same price. Lemont is another story and suspect if / when any of Canadian Bitumen Producers / Upgrader’s need more capacity they could probably buy it for same range values as Citgo’s Lyondell & Valero Krotz Springs refineries.
And Chavez has to sell because eventually their will be more actions to sieze PDVSA assets like one XOM won in Europe temporarily & they could lose all Citgo assets given size theft on Upgrader assets. The other part lose lose is that the Syncrude / Bitumen blend crude from Venezuela only has value to refineires with more than Nelson complexity greater than 10-15 range …….. and they are not in Asia, China, Europe or South America…..unless they are already tied to base supply of regional (Petrobras, China, India) or Mid East on Crude JV’s.
Some other thoughts: The Lyondell-Basell refinery (had update post coking.com & I had comments on) I mentioned that Pdvsa/Citgo only got ~$2.1 Billion out of its 38% share, but when Basell merger happened the refinery was valued at $20 Billion……so like Krotz Springs they are getting the $0.25-0.40/$1 market/replacement value out of the assets they are selling off. And even though they did get raise VZ crude price & contract formula ……. that will last only until Canada Bitumen crude gets US Gulf Coast by Pipeline next couple years.
Alveraz point on diesel/fuel to US poor is pure BS …… that was sale to spite US & pure publicity that backfired into current discount Citgo now has take on gas/diesel just to sell US market because of Chavez’s mouth! Just troll some anti-Citgo blogg sites for folks like “Truck Fred” who are encouraging active boycotting.
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