May 24 The United States on Tuesday announced new sanctions on Venezuela's state oil company PDVSA and six other smaller oil and shipping companies for engaging in trade with Iran in violation of a U.S. ban.
Deputy Secretary of State James Steinberg said the sanctions on PDVSA would prevent it from access to U.S. government contracts and import/export financing, but would not affect the company's sale of oil to the United States or the activities of its subsidiaries. [ID:nN24277213]
Steinberg said the new U.S. sanctions were aimed at squeezing Iran's gasoline supplies, and could have a serious impact as other companies recognize the risks of doing business with the Islamic Republic as it faces increasing isolation over its nuclear program.
Venezuelan President Hugo Chavez in 2009 agreed to supply Iran with around 20,000 barrels per day of gasoline to help the country deal with international sanctions that have limited its ability to import fuels. Later, in 2010, Venezuelan officials claimed that PDVSA had halted direct fuel supplies to Iran, saying the country had resolved its fuel shortages.
Venezuela is one of the largest foreign suppliers of crude to the United States and is home to the largest oil reserves outside of the Middle East.
The U.S. is the largest oil trade partner to Venezuela.
In 2010, Venezuela's oil shipments to the U.S. averaged 987,000 barrels per day. In February 2011, the country shipped 878,000 bpd, according to the Department of Energy. The sanctions would not affect the sales.
In the United States, PDVSA's refineries are operated by Citgo Corp, which is controlled by Venezuela's government and indirectly owned by PDVSA. The language of the new sanctions does not indicate that they would impact Citgo's activities.
The five U.S.-based refineries have combined processing capacity of about 1.08 million bpd, according to Citgo figures. These are (in barrels per day): Wholly-owned U.S. refineries - 759,500 * Lake Charles, Louisiana 429,500 * Corpus Christi, Texas 163,000 * Lemont, Illinois 167,000 Refinery joint ventures share 271,250 * Chalmette, Louisiana 192,500 50/50 with Exxon Mobil Corp (XOM.N) * St. Croix, Virgin Islands 350,000 50/50 with Hess Corp. (HES.N) * Merey Sweeny LP 70,000 delayed coker 50/50 with ConocoPhillips (COP.N)
Venezuela also directly ships oil products like gasoline and diesel to the United States, processed in its own refining network with capacity near 1.3 million bpd.
EXPLORATION AND PRODUCTION
Chevron Corp (CVX.N) is the only U.S. oil major with exploration and production operations in Venezuela. The new sanctions are unlikely to affect those activities, said Harry Clark, a partner and international trade expert at law firm Dewey & Leboeuf in Washington.
Both ConocoPhillips and Exxon Mobil had exploration and production activities in Venezuela which were seized during a nationalization campaign after President Hugo Chavez took over operations at several oil projects.
The two companies are currently in arbitration with Venezuela's government. (Reporting by Janet McGurty and Joshua Schneyer; compiled by Janet McGurty; Editing by Marguerita Choy)
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