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PDVSA Stops Sales Oil Exxon Update3

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This topic contains 3 replies, has 1 voice, and was last updated by  Charles Randall 12 years, 11 months ago.

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  • #3796

    Charles Randall
    Participant

    Venezuelan State Company Stops Sales of Oil to Exxon (Update3)
    2008-02-12 22:30 (New York)

    By Steven Bodzin
         Feb. 12, 2007 (Bloomberg) — Petroleos de Venezuela SA, the state
    oil company, cut off sales of crude, gasoline and diesel to
    Exxon Mobil Corp. in retaliation for the freezing of $12 billion
    in assets in a legal dispute.
         Petroleos de Venezuela “paralyzed” sales to Exxon in
    response to court-ordered asset freezes, the Caracas-based
    company known as PDVSA said in a statement. PDVSA said it will
    supply the refinery it co-owns with Exxon in Chalmette,
    Louisiana.
         Exxon Mobil, which refines more crude than any other
    company, won an order freezing $315 million in a Venezuelan
    account in the U.S. It was granted a ruling blocking

    transactions in the U.K., the Netherlands and Netherlands
    Antilles affecting as much as $12 billion in assets pending the
    resolution of a dispute over the government’s seizure last year
    of a heavy oil project.
         “It’s more or less political rhetoric,” Ruchir Kadakia,
    an international oil analyst at Cambridge Energy Research
    Associates, told reporters in Houston. “It’ll have very little
    commercial impact on Exxon Mobil.”
         The move probably will cut revenue for PDVSA because it
    reduces the number of potential customers and will force the
    company’s traders to rely more on middlemen who won’t pay as
    much as Exxon Mobil, Kadakia said.

                              `Willing to Talk’

         Exxon Mobil was still prepared to talk with the Venezuelan
    government and PDVSA, said Senior Vice-President Mark Albers.
         “We remain willing to engage in substantive discussions
    with the government of Venezuela and PDVSA on the fair-market
    value of assets,’
    ‘ he said at a press conference at the
    Cambridge Energy Research Associates conference in Houston.
         Exxon is claiming more than $12 billion in the arbitration,
    according to a company filing in the U.S. District Court.
         ConocoPhillips, which is also in arbitration with Venezuela,
    wasn’t mentioned in today’s PDVSA statement
    . Rafael Ramirez, the
    country’s oil minister and president of PDVSA, said Feb. 8 that
    talks with Conoco were going well and that he expected a
    negotiated resolution.
         Arbitration will likely take several years, and Conoco
    favors negotiations with Venezuela to avoid a legal battle,
    Chief Executive Officer Jim Mulva told reporters at the
    conference.
         “Those talks continue, and we are making progress,” Mulva
    said. “I hope that maybe we can come to some kind of solution
    in 2008.”

                             IEA Ready to Act

         The International Energy Agency is “prepared to move” oil
    from its strategic reserve if the Venezuelan action causes
    physical constraints in the oil market, Executive Director Nobuo
    Tanaka said in a briefing at the CERA conference.
         IEA, a Paris-based adviser to 27 oil-consuming countries,
    requires member states to hold oil stockpiles equivalent to no
    fewer than 90 days of the prior year’s net imports
    .
         “Venezuelan oil is a very heavy crude, and the demand for
    it is in the Gulf of Mexico,” Tanaka said. “So if they have a
    program where they try to cut exports to the U.S., that will
    choke their own demand.”
         Most of Venezuela’s shipments to Exxon last year were to
    the Chalmette joint venture
    , Andy Lipow, president of Lipow Oil
    Associates, said today in a telephone interview. The country,
    the biggest oil exporter in the Americas, sold about 50,000
    barrels a day directly to Exxon and another 78,000 to Chalmette.

                          Exports Aren’t `Huge’

         “In the scheme of things, 50,000 barrels a day isn’t a
    huge amount,” Lipow said. The Atlantis field that BP Plc has
    brought into production in the U.S. Gulf of Mexico will soon
    produce 200,000 barrels a day
    , with characteristics similar to
    Venezuelan crude, he said.
         Venezuela provided about 1.64 million barrels a day of
    crude and products to the U.S.
    through November last year,
    according to Energy Department records. Of that, 1.43 million
    barrels a day went directly from Venezuela to the U.S. The rest
    arrived via the Hovensa refinery in the U.S. Virgin Islands.
    Hovensa is a joint venture of PDVSA and Hess Corp.
         Crude oil rose as much as 56 cents, or 0.6 percent, to
    $93.59 after PDVSA announced it would stop sales to Exxon.
         Venezuelan President Hugo Chavez threatened on Feb. 10 to
    cut off oil sales to the U.S., a warning that was widely
    discounted by industry analysts in both countries.

                          Disruption `Unlikely’

         “We consider any disruption to the U.S.-Venezuela oil
    trade as unlikely,” JP Morgan analyst Katherine Spector wrote
    in a note to clients today. “A halt in U.S.-bound exports would
    ultimately be more devastating to PDVSA than U.S. refiners,
    especially if carried out for a sustained period.”
         Exxon bought five shipments of Venezuelan crude and another
    cargo of refined products in November, according to Energy
    Department data. The ships went to facilities in the Texas
    cities of Port Arthur, Texas City, and Houston as well as Morgan
    City, Louisiana.
         Venezuela has a limited ability to cut off oil supply to
    the U.S. because most of its crude is heavy and high in sulfur,
    making it inappropriate for refining in most of the world’s
    refineries.
         While Chavez has announced plans for new refineries in
    Nicaragua, Ecuador and other countries in order to reduce
    reliance on the U.S., the Gulf Coast remains the location of
    most refineries able to handle Venezuelan crude.

    –With reporting by Joe Carroll and Margot Habiby in Houston.
    Editor: Alex Devine, John Viljoen.

    To contact the reporter on this story:
    Steven Bodzin in Caracas at +58-212-277-3711 or
    sbodzin@bloomberg.net.

    To contact the editor responsible for this story:
    Dan Stets at +1-212-617-4403 or
    dstets@bloomberg.net

  • #7046

    Charles Randall
    Participant

    New Post on the Venezuela Upgrader Grab – Exxon gets Ruling to freeze $375 million PDVSA assets & Chavez strikes back cutting oil sales to them. Both ConocoPhillips & Exxon continue to express a willingness to negotiate the loss of their assets. But they are also starting to take action to help the process along.
     
    Don’t you love it when the good guys get to score one – and actually get some support from both courts & IEA startegic reserves.  This also speaks volumes about the international opinion of Chavez’s actions where there is a long history of counting the true asset of any man or country to be in the honoring of its contracts or word.
     
    Good article by bloomberg – it catches that any action like this that Chavez takes will hurt him & his countries revenue more than his customer and that while the volumes are important they can be darwfed by the size of new fields like the BP one stated, that are coming online (ie -50MBD cut Exxon, BP new field +200MBD).
     
    Never get Crazy mixed up with Stupid however……. Chavez has been selling VLCC cargoes to China that was part of his 300MB/year contract, and placing some of it as Fuel Oil sales. Some of the original Upgrader JV Crude sales had linkage to HFO market or was priced close to the 75% WTI values that trend USGC No.6 3%S prices.
    Today with No.6 approaching 80-85% WTI which is also at record prices may netback better values. And while China does not have the refining capacity to utilize all the heavy crude they do have a butt load of ships needing bunkers as they import feedstocks & export products.
    Regards
    Charlie Randall

  • #7007

    Charles Randall
    Participant

    Here is Update (4) on Exxon Chalmette vs PDVSA asset freeze – Crude cargoes rejected by XOM
     
    Venezuela, Exxon in refinery supply talks
    CARACAS (Reuters) 3/01/08 – Venezuela is in talks with Exxon Mobil over supplies to the Chalmette refinery, the oil minister said on Friday, amid an escalating legal battle between the OPEC nation and the U.S. oil giant.
    Venezuela cut commercial ties to Exxon after it won court orders freezing up to $12 billion (6 billion pounds) in Venezuela’s assets but promised to honor a supply contract with Chalmette — a joint venture between Exxon and Venezuelan state oil company PDVSA located in the U.S. state of Louisiana.
    There has been, with respect to the Chalmette refinery, the intention by Exxon to ignore the supply contracts — an issue we are discussing,” Ramirez told reporters.
    An industry source told Reuters that Exxon had rejected several cargoes from the Petro Monagas heavy oil project, formerly the Cerro Negro heavy crude upgrader that Exxon ran until its nationalization last year.
    “A couple of cargoes have been pushed back for not meeting the quality specification,” said the source, who spoke on condition of anonymity. He said Chalmette, which receives most of its crude from the Petro Monagas project, was receiving less than it normally does from the project.
    But he said this may have been related to maintenance at the 192,000-barrel-per-day Chalmette, which in January began two months of planned maintenance to add new environmental controls.
    The cargo rejections do not necessarily reflect operational problems at Petro Monagas, the source added, because PDVSA may have incorrectly described the specifications of the crude being offered.
    Exxon has filed two arbitration suits seeking at least $5 billion in compensation for Venezuela’s takeover Cerro Negro as part of leftist President Hugo Chavez’s nationalization crusade meant to advance his self-styled socialist revolution.
    PDVSA is challenging a London court order on the temporary asset freeze, arguing the move was “weird” and based on “fantasy. “Venezuela’s deputy energy minister has told local media that the government has considered offering its stake in Chalmette as compensation for Cerro Negro assets.
    (Reporting by Brian Ellsworth; Editing by Christian Wiessner)

  • #6962

    Charles Randall
    Participant

    Here is recent update on XOM rejected crude for Chalmette from PDVSA JV Upgrader Cerro Negro. Wonder how much net back revenue hit Chavez is taking? :
     

    Venezuela says all Chalmette oil sent to China  
    Budapest Business Journal – Mar 30, 2008 11:05 PM
    Venezuela is sending to China all the oil it previously shipped to a US refinery

    http://www.bbj.hu/main/news_37865_venezuela+says+all+chalmette+oil+sent+to+china.html
     

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