September 7, 2009 at 1:32 am #3011
UPDATE:Conoco: Exercising Option To Buy PdVSA Merey Sweeny Stake
HOUSTON -9/5/09 (Dow Jones)- ConocoPhillips (COP) said Friday that it is opting to buy Petroleos de Venezuela’s 50% stake in their joint venture at a refinery in Texas because the Venezuelan state-owned oil company has defaulted on supply contracts.
The Houston-based oil company claims that PdVSA hasn’t been meeting its obligation to supply crude to Merey Sweeny L.P., which owns a major unit at the Conoco refinery in Sweeny, Texas.
The 70,000-barrel-a-day delayed coking unit allows the refinery to process heavier crude, which is produced in Venezuela. The entire refinery can process up to 247,000 barrels of crude a day.
The joint venture was formed in 1999 during a time when U.S. refining companies were looking to increase their ability to process heavier crude, which was abundant and selling for a deep discount to the light, sweet crude.
As in this case, other state-owned oil companies have bought interests in U.S. oil refineries. In such arrangements, the U.S. companies operate the plants.
On Aug. 28, Conoco notified PdVSA that it would exercise the rights under their joint-venture agreement to acquire PdVSA’s interest, company spokesman Rich Johnson said in an email.
PdVSA officials weren’t immediately available for comment.
PdVSA can dispute the transfer, and the two companies could wind up in court, according to Moody’s Investor Service. Moody’s viewed Conoco’s move to retain full ownership of the venture as favorable, upgrading its outlook for Merey Sweeny.
PdVSA already has a strained relationship with ConocoPhillips as well as other major integrated oil companies because Venezuela’s President, Hugo Chavez, has been kicking out Western oil companies in order to retain more profits for his country.
In 2007, Conoco was forced to report a $4.5 billion accounting charge after Venezuela seized oil assets.
PdVSA is also involved in a legal battle with Exxon Mobil Corp. (XOM) over changes in control and ownership of ventures producing heavy crude in Venezuela’s Orinoco River Basin.
The dispute has affected the type of crude run at Chalmette Refining LLC’s refinery in Louisiana, which is jointly owned by PdVSA and Exxon.
-By Susan Daker and Naureen S. Malik, Dow Jones Newswires; (713) 547-9208; firstname.lastname@example.org
(Dan Molinski contributed to this report) (END) Dow Jones Newswires
September 7, 2009 at 1:33 am #6013
This was overdue with PDVSA not supplying the crude to the JV refinery that was designed to take the syncrude from another COP JV upgrader assets that PDVSA unilatteraly took control. ExxonMobil has not taken PDVSA crude into its
Chalmette Refinery since the grab for its JV Upgrader asset.
September 7, 2009 at 12:08 pm #6012
That is not correct. XOM has purchased PdVSA crude numerous times for feed to Chalmette since April 2007, when the Jose Upgrader was renamed PetroMonagas and wholy run by PdVSA.
September 7, 2009 at 3:25 pm #6011
No technically it is correct – but if you stretch the edges then you have a point, but it is outside the contex of the news item. The Chalmette Refining LLC is JV coking asset (refinery is XOM) set up to take blended syncrude off the PDVSA/XOM JV Upgraer asset Cerro Negro. But if you are going to say taking in few spot cargoes is same as contract flow then you are either crazy or working for PDVSA.
XOM disputed the PDVSA takeover of its JV assets, for time had freeze on up $12B PDVSA assets, and PDVSA even talked swaping its 60% Chalmette asset for XOM’s part in Cerro Negro & other assets but it never went far. XOM stopped taking “contract crude” during the dipute & PDVSA even tried for while to get its people appointed in charge of Chalmette Refining Operations to get crude flowing again. <Several news updates are on Coker/Refinery/UPgrader news items – course they wont have the PDVSA biased perspective of truth on the matter.>
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