Page 5 - LatAmOil Week 03 2023

LatAmOil COMMENTARY LatAmOil

Bloomberg also reported on the same day that discount to world market prices in order to
the Kerala, a tanker not chartered by Chevron, secure customers, the news agency added.
was on track to deliver 250,000 barrels of Bos- It seems, though, that Tellechea’s financial
can crude from Venezuela to Pascagoula within concerns do not extend to Chevron. This makes
the next few days. Overall, it added, Chevron is sense, given that the US major is not the same
slated to lift about 1.5mn barrels of Venezuelan kind of fly-by-night operation as the brokers
oil in the month of January, with about half of that have been handling Venezuelan oil since the
the total going to the Pascagoula refinery. imposition of sanctions. As such, barring any
In the meantime, another US firm, Cono- major change in circumstances, Chevron can
coPhillips, was reported last week to be in probably expect to see its oil loadings continue
preliminary talks with Caracas on its options without interference from PdVSA – at least for
for transporting and selling Venezuelan oil to the time being, since its waiver from US sanc-
US buyers. If these discussions bear fruit, they tions is only valid until late May. PdVSA’s
would see ConocoPhillips returning to Vene- suspension
zuela after a hiatus of more than 15 years. ConocoPhillips and Citgo
These developments all appeared to be sig- It is not clear, though, whether ConocoPhillips of crude
nalling a shift toward co-operation, especially will have as much good fortune.
when viewed against the backdrop of nearly On the one hand, the company has yet to oil export
four years of sanctions. And now there seem to clear certain hurdles, in that it has not secured
be new signs pointing in the same direction. the same degree of exemption from US trade contracts has
restrictions as Chevron. It has been cleared by not affected
Contract suspension the US Treasury Department to attempt to col-
Earlier this week, reports emerged that PdVSA lect its debts in Venezuela, but it does not have Chevron
had suspended most of its oil export contracts. a licence to engage in upstream operations and
The suspension order has caused traffic to back trading. As such, it may need to confer further
up in Venezuelan ports, as vessels that were tak- with Washington before it can hammer out a
ing on oil have had to halt loading operations, deal with PdVSA.
move away from their berths and wait for new On the other hand, ConocoPhillips is also
instructions, sources familiar with the matter engaged in a legal dispute with the Venezue-
told Reuters. lan NOC. It is one of the plaintiffs in a lawsuit
According to the sources, the change in cir- over recovery of the amounts due to holders of
cumstances has not affected Chevron. Instead, PdVSA securities that were scheduled to mature
they said, it has mostly hit the little-known in 2020, after the sanctions were imposed, and is
companies that have been acting as brokers seeking equity in the NOC’s Citgo subsidiary as
for shipments of Venezuelan crude to Asia in compensation for its $1.29bn claim.
defiance of US sanctions, which are designed to Thus far, the US government has prevented
restrict PdVSA’s ability to produce, process and holders of the 2020 bonds from seizing Citgo
sell hydrocarbons to the greatest extent possible. shares as collateral on the grounds that doing
Reuters reported, citing the sources and so might damage the interests of Venezuelan
internal company documents, that the NOC opposition leader Juan Guaido, who has been
had ordered the brokers to put loadings on hold held up by Washington as the rightful leader of
for an indefinite period so that their contracts the South American country’s 2018 presidential
could be reviewed. It said that PdVSA’s newly election.
appointed CEO, Pedro Rafael Tellechea, had However, the Venezuelan opposition – which
ordered the review for the purpose of preventing has de facto control of Citgo’s board – ousted
the brokers from defaulting on payments. Guaido from his leadership position earlier this
Default is a serious concern, since many of month, in a move that raises questions about
the middlemen that are still willing to deal with control over the company, which operates a col-
PdVSA in the face of US sanctions are obscure lection of valuable downstream assets in the US.
shell companies that have no credit guarantees The situation is complicated enough that
and no track record in the trading business, Reu- it may take time to sort it out. In other words,
ters explained. ConocoPhillips may not be able to strike an
It is also especially burdensome because agreement with PdVSA before the end of Chev-
Venezuela must often sell its oil at a significant ron’s first waiver in May. ™

Chevron will send 750,000 barrels of Venezuelan oil to the Pascagoula refinery in January (Photo: Chevron)

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