MOSCOW (MRC) -- Sanctions barring U.S. imports of Venezuelan crude put refiner Citgo Petroleum Corp at a disadvantage to better-financed rivals, the board chair named by Venezuela's political opposition for state oil company PDVSA said, as per Reuters.
Many refineries on the U.S. Gulf Coast - including Citgo's facilities in Texas and Louisiana - were designed to process heavy, sour crudes, which historically came largely from OPEC member Venezuela. After Washington imposed sanctions on PDVSA two years ago, Venezuelan crude "disappeared" and U.S. refiners have competed for alternatives from Colombia, Mexico and Canada, said Horacio Medina, chair of the PDVSA ad-hoc board named by the opposition, which has controlled Citgo since 2019.
"These refineries have an important advantage over Citgo," Medina told opposition lawmakers. "They have investors with deep pockets who were capable of putting in money to make investments and modify some of the plants ... to adapt them to process light and medium crudes, which we have not had."
Citgo Chief Executive Officer Carlos Jorda last month said that the company was working on processing more lighter crudes, and its refineries were on track to boost utilization rates in the second quarter after bad weather hit some plants early this year. The eighth-largest U.S. refiner, with a total capacity to process some 769,000 barrels per day between its three plants, has suffered net losses in six of the last eight quarters, including a USD667 million total loss for 2020 and a USD180 million loss in the first quarter of 2021 due to weak demand and storm-related disruptions.
The company has refinanced and raised new debt and is expecting an about USD500 million income-tax refund to bolster liquidity this year. U.S sanctions on PDVSA were meant to pressure Venezuelan President Nicolas Maduro's government, which stands accused of corruption and election rigging. Maduro has accused the opposition of "stealing" Citgo.
As per MRC, Citgo Refining, the US subsidiary of Venezuelan PDVSA, began the process of restarting production on 21 July at its FCC 2 in Corpus Christi, TX, USA after refurbishment. This unit with a capacity of 136 thousand tons of propylene per year was closed on June 18 due to the interruption of the steam supply. Chemical emissions during the restart are expected until 27 July.
Ethylene and propylene are the main feedstocks for the production of polyethylene (PE) and polypropylene (PP), respectively.
According to MRC's ScanPlast report, Russia's estimated PE consumption totalled 953,400 tonnes in the first five months of 2021, which virtually corresponded to the same figure a year earlier. High denisty polyethylene (HDPE) shipments decreased. At the same time, PP shipments to the Russian market were 607,8900 tonnes in January-May 2021, up by 33% year on year. Shipments of homopolymer PP and PP block copolymers increased, whereas deliveries of PP random copolymers decreased.
Citgo operates refineries, terminals and a network of gas stations in the United States. The company produces 749 thousand barrels of oil daily and provides about 5% of the country's refining capacity.