Published On: Wed, Apr 23rd, 2014

SAUDI AMERICA and Petroleos de Venezuela SA

Jacob Gelt DekkerThe global energy map has been redrawn. The United States of America has surpassed Saudi Arabia and Russia as the world’s top oil & gas producer. USA with its neighbors, Canada and Mexico, ended the era of oil dependency of the Western world on the Middle East and hostile suppliers, like Libya, Iraq and Venezuela.

While Putin in Russia is playing a chess game over Ukraine, and Maduro in Venezuela is scrambling to pull Chavez’ lost political/oil supply game out from the inevitable abyss, in “North America the outlook is incredibly bright,” according to Jason Bardoff, a former senior energy advisor in Obama’s White House. “ Everything we see on the ground suggests reason to be optimistic.”

For more than ten years, Venezuelan decision-making has been slow, erratic, driven by political ideology, and corrupted by personal financial gain of their leaders. The once thriving national oil industry of Venezuela with the largest oil reserves in the world, saw its production fall by 50%, since 2008, and many of its customers bidding them farewell.

Once, the Curacao refinery, operated by Shell, was the major supply line for the victorious Allied Forces during World War II, in the battle against the Nazis, today, with Pdvsa at the operational helm, talks revolve solely around ending all activities and closing down the entire refinery, or at best, turning the smoke bellowing industrial monster into a storage facility. Already last week, Pdvsa entered into a lease agreement for storage in St. Eustatia with NuStar Energy, clearly foreshadowing its intend, while, once again, suspending talks with the Curacao Government last month; such cancellation at the last minute was a repeat for the 7th year in a row.

There is no lack of demand for oil in the world. The Wall Street Journal announced, late 2013, “World oil demand will rise by 1.1% this year ( 2013) to 90.26 million barrels a day, with gains coming from countries outside of the major industrialized nations. The Energy Information Administration said the trend will continue in 2014, when developing nations fuel a 1.3% increase in demand to 91.43 million barrels a day.”

What changed was the energy map. The USA is now a net, oil and gas exporter and does not need any of the Pdvsa -products. USA imports of Venezuelan oil have gone from 1.039.000 barrels per day in 2008, to only 755.000 in 2013, and mostly through Pdvsa’s subsidiary CITGO.

Citgo Petroleum Corporation (or Citgo) is an American refiner, transporter and marketer of transportation fuels, lubricants, petrochemicals and other industrial products. The company is owned by PDV America, Inc., an indirect wholly owned subsidiary of Petróleos de Venezuela, S.A. . In October 2010, Hugo Chavez announced the intention to have Petróleos de Venezuela sell its Citgo subsidiary calling it, "bad business" and citing low profits since 2006. The minimum sale price was set at 10 billion US dollars; however, Petróleos de Venezuela has been unable to find a buyer at that price.

When in 2011, Venezuelan oil minister Rafael Ramirez announced new targets of six million barrels per day by 2019 and an immediate goal of 5.8 million barrels a day by 2012, it looked feasible, only to finish in 2012, at just 2.9 million, and in 2013 even lower, at 2.2 million . That’s down 3.2 million, in 2005. In the meantime, Colombia is producing equal amounts or even more per day.

So with the USA, as a customer of Venezuelan oil reduced, or totally out of the market, ever dwindling oil production in the Orinoco Delta, and Pdvsa refinery capacity, Curacao should look for new avenues to maximize the use of its refinery facility. Not the South North route, but the reverse, the North South traffic seems a new opportunity. Turning the Curacao refinery into a storage hub for USA-exported Liquified Natural Gas on its way to South America and the Caribbean could be a very viable option.

By Jacob Gelt Dekker - Columnist for Curacao Chronicle

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