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Tempting American oil producers to flock back to Venezuela poses a challenge, even as greater access to the South American nation’s heavy crude promises to benefit U.S. refiners.
Energy executives will be forced to gauge stability in a country where the industry has fallen into disarray after more than two decades of mismanagement and corruption. In addition, the world doesn’t have much appetite for more oil, with prices languishing below $60 a barrel, the WSJ’s Collin Eaton, Kejal Vyas and David Uberti write. The only U.S. oil major in Venezuela now is Chevron, which secured a new, more-limited license to operate there from the Trump administration in July.
Other big oil companies will likely take time to evaluate the situation because Venezuela has a track record of appropriating oil assets, analysts said. Rebuilding rusted oil-field installations also will require an economic-stabilization plan to attract financing, as well as changes to laws. And the U.S. Treasury’s Office of Foreign Assets Control will have to clear a pathway around sanctions in place on Venezuela’s government and state oil company, PdVSA, Dow Jones Risk Journal’s Max Fillion writes.
American oil refiners, however, stand to be big beneficiaries if Venezuela’s vast crude reserves flow more freely into the world market, the Journal’s Ryan Dezember reports. Refineries along the Gulf and West coasts were generally designed to handle heavy, sour crude imported from Venezuela and Mexico, not the light, sweet crude with which U.S. frackers have swamped the market. That is a big reason many U.S. refiners have struggled despite the drilling boom.
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Trump offered an incentive to China to support the U.S. removal of Venezuela’s leader–which Beijing condemned– suggesting the Latin American country will supply even more oil to world’s No. 2 economy. (WSJ)
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Moscow formally requested that the U.S. stop pursuing the oil tanker Bella 1, which had been sailing for Venezuela but fled from the Coast Guard and claimed Russian protection. (New York Times)
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