Citgo Confirms Venezuelan Crude Can Be Replaced

The new chairwoman of U.S. refiner Citgo has assured energy industry attendants of the CERAWeek conference that the company is resilient enough to continue operating without any major hiccups.

The Houston Chronicle quoted Luisa Palacios as saying "For the last month (Citgo) has been developing contingency plans because of the risk that could be in place. I have to say, the flexibility of our refiners has allowed us to adjust to shock in a quite substantial way.”

Palacios was appointed chairwoman along with a whole new board of directors by the interim government of Venezuela appointed by opposition leader Juan Guaido. Guaido declared himself interim president this January after slamming the May 2018 elections as illegitimate and calling on the Venezuelan people to take to the streets to try and topple the Maduro government.

Earlier this year, Guaido said he would replace the board of directors not just of Citgo but of PDVSA as well. He did so last month but the original board of the troubled company also stayed in place.

Yet Citgo is perhaps more important. While PDVSA has been hit by U.S. sanctions, Citgo is a U.S. incorporated company, whose assets now seem to be at the disposal of the Venezuelan opposition with Washington’s blessing as it increases the pressure on PDVSA and the Maduro government by freezing its assets in the United States and setting up a new account for Venezuelan crude import payments, also to be made available to the Guaido government.,

Citgo operated refineries in three states—Texas, Louisiana, and Illinois—and is a major importer of Venezuelan crude. However, according to Palacios, Venezuelan crude makes up about a quarter of its total intake of crude and it can be replaced with oil from other supplier.

"It's a shock, but it's one we're very well placed to weather," Palacios said referring to the latest sanctions that more or less cut off Venezuelan crude oil’s access to the Gulf Coast refineries.

By Irina Slav for Oilprice.com