Washington 'embargoes' Venezuela assets: Update 2

Market: Crude oil, Oil products
06/08/19

Adds comment from Guaido, Bolton.

The US has issued a blanket prohibition on the sale or transfer of Venezuelan government property in the US, including assets that belong to state-owned PdV.

An executive order by President Donald Trump, issued yesterday, blocks the transfer of any property or shares of property in the US held by the Venezuelan president Nicolas Maduro's government or anyone determined by the Treasury and State departments to be supporters of the Venezuelan government. The decision prohibits the sale of any interest in US independent refiner Citgo, Venezuela's most valuable overseas asset, after the country's creditors won a key US court victory in the pursuit of unpaid debts.

"Given this measure, Citgo and all of its assets are protected," Venezuela's National Assembly leader Juan Guaido said in a tweet. "In addition, any debt that the regime intends to incur with assets of the nation will be illegal. Anyone who wants to benefit from the crisis will be driven away."

The US and more than 50 western governments recognize Guaido as Venezuela's interim president. Yesterday's designation exempts the interim Guaido government and the National Assembly, as well as humanitarian aid.

Former Canadian mining firm Crystallex is pursuing shares of Citgo to satisfy a $1.4bn arbitration award against Venezuela. The Venezuelan opposition lobbied the US to block any such transfer following last week's ruling by the US Third Circuit Court of Appeals upholding Crystallex's efforts. The decision could lead to an auction of the controlling company's shares, a move that has rattled lenders and affirmed a path for companies seeking payment for more than $150bn in arbitration awards and other debt.

Crystallex did not have an immediate comment. Licenses exempting certain business — including those for PdV-owned US independent refiner Citgo and Chevron's minority stake in a Venezuelan synthetic crude joint venture with PdV — remain in place. Most licenses allowing for winding down business with Venezuelan government entities have expired. The new requirements extend prohibitions against financial transactions beyond the Office of Foreign Assets Control's (Ofac) specially designated nationals and blocked persons list (SDN).

Guaido has installed directors of Citgo and PdV, an action upheld by the Delaware Chancery Court late last week. But the opposition leader has not expanded his control inside Venezuela, and an attempt to depose President Nicolas Maduro's government fizzled out earlier this year.

Trump and his administration officials previewed the executive order as an economic "embargo" against Venezuela. Under that interpretation, Venezuela joins Iran and Cuba on a short list of countries the US has placed under an economic embargo that would discourage other countries from doing business with those nations.

But Trump's order does not impose secondary sanctions and is limited to Venezuelan government assets in the US, according to Doug Jacobson, partner in law firm Jacobson Burton Kelley.

Trump's order was issued ahead of today's conference on Venezuela in Lima, Peru, where governments that recognize Guaido as leader will discuss plans for Venezuela's political transition and economic recovery. The US and other donors are due to unveil extensive plans for restoring Venezuela's battered oil sector and economy once Maduro steps down and Guaido takes over as president.

"Maduro is hoping to wait out the international community and the people of Venezuela," US national security adviser John Bolton said at that conference. "We show here today that the international community remains steadfast in its commitment to increase the pressure and accelerate a peaceful transition to Venezuela's only legitimate government institution, the National Assembly."

But the prospect of a government transition in Venezuela remains remote as Maduro maintains control over the country. And the US administration has had to contend with the possibility that the Venezuelan assets under Guaido's control may have been lost to debt-holders.

The US imposed sanctions on Venezuela in January to cut off revenue to the Maduro government and support new elections. US crude imports from Venezuela, once the third-largest supplier of heavy, sour crude, fell to zero in May.

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21/11/24

Pemex's lean Zama spending undercuts goals

Mexico City, 21 November (Argus) — State-owned oil company Pemex's limited budget for developing one of Mexico's most-promising new oil fields is putting Mexico's crude production and refining goals at risk through 2030. First production from the Zama field will likely not start until at least 2028 instead of late next year, as forecast earlier, based on a timeline in a recent presentation from Pemex. Pemex continues to work on the basic engineering for the Zama field because of the lack of cash, staff of hydrocarbon regulator CNH said last week. The latest delay on Zama echoes criticism from when Pemex took over operating the field in 2022 that it did not have sufficient experience or funds to carry on with the project, said industry sources. "Unfortunately, the Pemex budget is always a shadowy mystery," said a person close to the project who asked not to be named. "There is no transparency or certainty regarding when they do and do not honor payment commitments." Zama is a shallow-water field unified in 2022 between Pemex area AE-152-Uchukil and the discovery made in 2017 by a consortium led by US oil company Talos Energy. Pemex holds 50.4pc of the Zama project while Talos and Slim's subsidiary Grupo Carso have 17.4pc, German company Wintershall Dea 17.4pc and British company Harbour Energy 12.4pc. The state-owned company expects to spend $370.8mn to develop Zama in 2025, 64pc less than the original $1.05bn budget proposed by Pemex for next year, according to data from CNH. The regulator cleared the change last week, but commissioners questioned the CNH staff about the new delays. Pemex's original development plan showed that the company forecast the first crude production by December 2025, with 2,000 b/d and about 4mn cf/d of gas. The original plan forecast Zama hitting peak production of 180,000 b/d in 2029, making it Mexico's second-largest crude producer, only under the Maloob field. President Claudia Sheinbaum and Pemex's new new chief executive Victor Rodriguez flagged the importance of shallow-water field Zama and ultra deep field Trion to support Pemex's oil production target of 1.8mn b/d in the upcoming six years in a presentation last week. Pemex's new plan is focused on feeding its own refining system rather than crude exports. The company expects to increase gasoline, diesel and jet fuel production by 343,000 b/d, according to the plan, but it did not give a timeline. Pemex produced 491,000 b/d of gasoline, diesel and jet fuel in the first nine months of 2024. Mexico's proposed 2025 federal budget also shows lower spending for Zama, at Ps3.1bn ($154mn) for 2025, even less than the figure approved by CNH on 14 November. Neither Pemex not Talos responded to requests for additional comment. "Zama is the story of the triumph of ideology over practicality," said a Pemex source who asked not to be named. The state-owned company is studying how to bring in new investors to the project once congress approves secondary laws to implement recent energy reforms, the source said. But uncertainty over the legal framework and the general deterioration of Mexico's business climate will make this more difficult, the Pemex source added. The involvement of Mexican billionaire Carlos Slim, who acquired 49.9pc of Talos Energy share in Zama last year, brought new hopes that work at Zama could finally accelerate. Instead, Slim's entrance slowed the project, as the new partner had to review the project, a former regulator who asked not to be named said. Talos Energy, the lead operator when the field was discovered over seven years ago, is now "frustrated" by the poor progress of the project. "We have Mexico, a great discovery in Zama, we're seven years into it, and still have not made a final investment decision on it," said Talos Energy interim chief executive Joseph Mills, in a conference call with investors last week. "So a lot of frustration there, as you can imagine." By Édgar Sígler Pemex 2024 crude output, throughput '000 b/d Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

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Cost of government support for fossil fuels still high

21/11/24

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21/11/24

Cost of government support for fossil fuels still high

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Cop: Talks in Baku torn between mitigation and finance

21/11/24

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21/11/24

Cop: Talks in Baku torn between mitigation and finance

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Shell will supply Brussels airport with SAF via DHL

21/11/24

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21/11/24

Shell will supply Brussels airport with SAF via DHL

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Cop: EU, four countries commit to 1.5°C climate plans

21/11/24

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21/11/24

Cop: EU, four countries commit to 1.5°C climate plans

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