Treasury Department that will allow it to ship more than 100,000 BPD of Venezuelan crude to the U.S. Reuters reported last week that Chevron obtained a license from the U.S. government recently loosened the sanctions a bit, allowing Chevron to expand production in a joint venture with PDVSA, and to ship that oil to the U.S. This oil sells at a discount to lighter oil, and as a result refiners make more money processing this crude oil into finished products.īut, the U.S. refiners have invested billions of dollars into processing heavy oil. Venezuela’s oil is heavy, which means it requires more processing by refiners. This production decline has particularly impacted U.S. The net result of a loss of expertise, international sanctions, failure to reinvest in the oil industry, and falling oil prices in 2015 resulted in the steep decline seen in the graphic above. Further, the Chávez government had fired many experienced PDVSA employees in 2003 and filled those positions with Chávez loyalists. However, the implications were that most international companies were essentially kicked out of the country. That oil requires a higher level of technical expertise to develop, which international companies possess. Most of Venezuela's proved oil reserves consists of extra-heavy crude oil in the Orinoco Belt. These expropriations were later ruled to be illegal, and compensation was granted to both companies. ExxonMobil XOM and ConocoPhillips COP refused, and as a result their assets were expropriated. Venezuela demanded changes to the agreements made by the international oil companies that would give PDVSA majority control of the projects.
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