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Refiner Citgo Petroleum, the U.S. subsidiary of Venezuela’s state-held oil firm PDVSA, expects to play a “bridge” role in a Venezuelan transition once U.S. sanctions are lifted, and could help with the revamp of Venezuela’s decrepit refineries, Citgo’s chief executive Carlos Jordá told Argus in an interview.
“Citgo could provide a bridge for products and help someone to get those refineries started,” Jordá told Argus in the interview published this week.
The U.S. sanctions on Venezuela have accelerated the demise of the state-oil firm PDVSA, which has also struggled with outdated equipment at refineries and plants due to years of a lack of investment in maintenance and spare parts.
Venezuela had 1.3 million barrels per day (bpd) of refining capacity, but currently one-tenth of this capacity is probably operational.
“It is not going to be easy, but eventually something will get done with the refineries. Maybe not 500,000 b/d but 300,000 b/d of capacity will be restored. Venezuela cannot be 100pc dependent on imports,” Citgo’s CEO told Argus.
The possible restoration of Venezuela’s oil industry, when sanctions are lifted—whenever this will be—will likely focus first on the upstream sector, according to the executive.
“It is hard to get capital to go into refining,” he added.
Last week, Citgo, the eighth-largest refiner in the U.S. in terms of crude processing capacities, reported a net income for the second quarter, its first quarterly profit since the third quarter of 2019. In the second quarter of 2021, improved mobility and increased demand for fuels helped Citgo book a net income of $3 million, the company said.
“Given the multiple challenges we have faced during 2020 and the first half of 2021, this return to profitability is particularly satisfying – especially given the slow margin recovery we are experiencing due to the lingering effects of the pandemic,” Carlos Jordá said in a statement last week.
By Charles Kennedy for Oilprice.com
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Charles is a writer for Oilprice.com