Page 7 - NorthAmOil Week 03 2023

NorthAmOil COMMENTARY NorthAmOil

According to the sources, the change in cir- ConocoPhillips and Citgo
cumstances has not affected Chevron. Instead, It is not clear, though, whether ConocoPhillips
they said, it has mostly hit the little-known will have as much good fortune.
companies that have been acting as brokers On the one hand, the company has yet to
for shipments of Venezuelan crude to Asia in clear certain hurdles, in that it has not secured
defiance of US sanctions, which are designed the same degree of exemption from US trade
to restrict PdVSA’s ability to produce, process restrictions as Chevron. It has been cleared by
and sell hydrocarbons to the greatest extent the US Treasury Department to attempt to col-
possible. lect its debts in Venezuela, but it does not have
Reuters reported, citing the sources and a licence to engage in upstream operations and
internal company documents, that the NOC trading. As such, it may need to confer further
had ordered the brokers to put loadings on with Washington before it can hammer out a
hold for an indefinite period so that their con- deal with PdVSA.
tracts could be reviewed. It said that PdVSA’s On the other hand, ConocoPhillips is also
newly appointed CEO, Pedro Rafael Telle- engaged in a legal dispute with the Venezue-
chea, had ordered the review for the purpose lan NOC. It is one of the plaintiffs in a lawsuit
of preventing the brokers from defaulting on over recovery of the amounts due to holders of
payments. PdVSA securities that were scheduled to mature Thus far, the
Default is a serious concern, since many of in 2020, after the sanctions were imposed, and is
the middlemen that are still willing to deal with seeking equity in the NOC’s Citgo subsidiary as US government
PdVSA in the face of US sanctions are obscure compensation for its $1.29bn claim. has prevented
shell companies that have no credit guarantees Thus far, the US government has prevented
and no track record in the trading business, holders of the 2020 bonds from seizing Citgo holders of the
Reuters explained. It is also especially burden- shares as collateral on the grounds that doing so
some because Venezuela must often sell its oil might damage the interests of Venezuelan oppo- 2020 bonds
at a significant discount to world market prices sition leader Juan Guaido, who has been held up
in order to secure customers, the news agency by Washington as the rightful leader of the South from seizing
added. American country’s 2018 presidential election. Citgo shares as
It seems, though, that Tellechea’s financial However, the Venezuelan opposition – which
concerns do not extend to Chevron. This makes has de facto control of Citgo’s board – ousted collateral.
sense, given that the US major is not the same Guaido from his leadership position earlier this
kind of fly-by-night operation as the brokers month, in a move that raises questions about
that have been handling Venezuelan oil since control over the company, which operates a col-
the imposition of sanctions. As such, barring lection of valuable downstream assets in the US.
any major change in circumstances, Chevron The situation is complicated enough that
can probably expect to see its oil loadings con- it may take time to sort it out. In other words,
tinue without interference from PdVSA – at ConocoPhillips may not be able to strike an
least for the time being, since its waiver from US agreement with PdVSA before the end of Chev-
sanctions is only valid until late May. ron’s first waiver in May.™

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