What happens to Citgo's US refineries?

Citgo was already in plenty of trouble before this latest drama in the purge. I think it was supplying around 4% of US fuel capacity before US sanctions on Venezuela. Now no one wants to supply Citgo refineries. I think the bigger question is not what's happening to Citgo directly from an investor's perspective, but who is benefitting because Citgo is a private company--a subsidiary of PDVSA.

 

 

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I saw recently that at least 2 Canadian supplies can't even trade with Citgo--directly, at least. The credit risk is too high so they have to sell through third parties. Even before these latest high-profile arrests few wanted to give Citgo supplies on open credit. They were asking for payment up front or bank letters. And Citgo needs almost 750,000 bpd to feed its refineries. But I like the bigger question @Kate Turlington I don't know the answer to this, but I'm intrigued ... who IS benefitting most?

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I would look at Russia's stake in all of this. Russia's Rosneft (state-run) owns a 49.9% share of CITGO. While the US is busy slapping sanctions on big oil venues like Iran and Venezuela, Russia is busying staking claims right in the American backyard. It took this stake in Citgo as collateral for a $1.5-billion loan to PVDSA. Now Moscow wants to swap it's CITGO stake for a stake in Venezuelan oilfields, so it can build bigger reserves in Latin America--again, eyeing the US backyard. 

As far as who might benefit from the Citgo drama from an investor's perspective, I'm not sure. Seems like a complicated question. I thought Citgo was mostly refining low-quality Venezuelan crude. Not sure where PDVSA will refine it's product if this spirals out of control any further. It's pretty hard to find refiners set up to refine this oil. 

 

 

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oh, and it's not lost on anyone--as a sidenote--that the US is fighting for some naturalized citizens who are among those Citgo execs behind bars in Venezuela ...

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agreed. The Kremlin is great at taking full advantage of chaos. It's angling in Syria, Iraqi Kurdistan, Iran--for oil deals that give it significant influence. Oils deals with the Kurds in Northern Iraq give it influence in Syria and probably are meant to keep Turkey in line a bit. But the biggest move is definitely Venezuela--also the riskiest. 

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Always thought refining was downstream..

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