SEATTLE (Oil Monster): Refiner Phillips 66 can run Venezuelan crude at two U.S. Gulf Coast refineries as production ramps up, Chief Financial Officer Kevin Mitchell said on a conference call on Tuesday.
Speaking at the Goldman Sachs Energy, CleanTech & Utilities Conference, Mitchell said its Lake Charles and Sweeny refineries in Texas have the capacity to process a couple of hundred thousand barrels per day of Venezuelan crudes.
Over the weekend, President Donald Trump said the U.S. would "take control" of Venezuela after U.S. forces ousted Venezuelan President Nicolás Maduro, a step that could give U.S. energy companies access to the country's vast oil reserves.
The Trump administration plans to meet with executives from U.S. oil companies later this week to discuss boosting Venezuelan oil production, Reuters reported citing a source. The country sits atop the world's largest oil reserves but accounts only for about 1% of global supply.
Mismanagement and limited foreign investment following the nationalization of Venezuela's oil industry and sanctions led to a huge drop in annual production, which averaged about 1.1 million bpd last year.
Phillips 66 CEO Mark Lashier said he sees a longer-term potential for growth as Venezuela - which was producing as much as 3.5 million bpd in the 1970s - ramps up production.
"We've got refineries designed for the long term to process that crude," Lashier said. He, however, added that it would take "years, if not decades" of investment by upstream companies to realize the full potential.
"This is an opportunity for Venezuela to return back into the capitalist folds, to bring their economy and to benefit their people over the long term," he said.
Venezuelan crude is a heavy sour grade with high sulfur content, making it suitable for producing diesel and heavier fuels, albeit at lower margins compared with other grades, particularly those from the Middle East.
Analysts have noted U.S. refiners such as Phillips 66, Valero Energy and Marathon Petroleum stand to benefit from increased Venezuelan production as the U.S. Gulf Coast refineries were designed to process such grades.
Courtesy: www.reuters.com
