Go bold, go big

/ November 12, 2014
For sale

For sale

While we were on break, a Reuters story came out about potential buyers going on a tour of our Citgo refineries – you know, the ones we are truly, definitely not going to sell.

The tour got me thinking – if the government is going to go ahead with the advice of their French svengalis and sell the refineries in the U.S., why don’t they sell all of them? After all, they are doing a terrible job with the ones we have inside Venezuela. Just last weekend, we learned via Reuters (thanks, again) that a prolongued power outage means PDVSA is scurrying to find fuel to import.

I mean, if you’re going to sell the refineries, sell them all … particularly the ones that you simply don’t know how to manage. So my message to chavistas is simple: step away … from the refineries … nice and easy … and nobody gets hurt.

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13 thoughts on “Go bold, go big”

  1. I guess the problem is that an outside buyer would not have the de facto immunity from safety, environmental and labour laws that the regime claims for itself, and it would be buying a huge potential liability under said laws (as illustrated in your photo), so my question is, could PDVSA even GIVE these assets away?….I don’t think so….

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  2. Interesting tidbit in the Reuters story

    Of the three, the Lemont plant is considered the most attractive as it enjoys consistent profits because it runs cheap oil from Canada’s tar sands fields in Alberta, and not heavy Venezuelan crude as do the other two refineries.

    It looks like serious refiners aren’t very exited at the idea of having to deal with Venezuela…

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  3. No, Juan, coge mínimo: van a vender las de afuera porque esas son las que dan ganancias, y el lucro es malo. Las de adentro está bien quedárselas porque dan pérdidas, como Dios manda.

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  4. Maduro will likely hire teams of Cubans to run the refineries. Just like they run the ports, the electric generation facilities, the cedula management, or for that matter the whole Venezuela military complex. The Cubans (i.e. the Castros) could protect their funding from Venezuela by protecting the refineries.

    Just watch.

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  6. I’ve said it before, and I’ll say it again, the natural buyers of citgo’s refineries would be the chinese- they already have the Venezuelan crude to feed them, and at a good enough discount that guarantees them a substantial profit. The main problem here of course, would be the refusal of the US authorities to approve the deal because of US national security issues (like they did for the Unocal deal). The solution could of course be for the Chinese to team up with a US private equity outfit that would put the deal under a US flag for regulatory purposes. (Think a Delaware registered SPV that would have the contracts with the Chinese to buy the Venezuelan crude.)

    They could of course sell it to themselves through a bunch of well connected boliburguesese and their frontmen (Hanson, any interest?)…

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  7. Lemont is the least profitable Citgo refinery because its located in an area (chicago) where there are too many refineries competing for the same market and margins are low to non existent , it is well suited to the use of Canadian crude and not venezuelan crude which is heavy and has to be brought up through pipelines from the US gulf. What people forget is that Citgo is not just a set of refineries but a very large and usually profitable marketing system so cutting the refinery assets in pieces doesnt get Pdvsa the best price because the marketing system is probably worth as much as the refineries. Selling Lemont alone wont get them the money they need. The Venezuelan system of refineries wont be bought by anyone because it has to operate in an enviroment where local domestic supplies have mandatory priority and are sold at give away prices and where labour and other conditions make their operation more difficult and costly than anywhere in the world. Also they are dependent on the supply of crudes by a govt that can never be trusted to keep it promises and committments . The Chinese might be interested in the whole Citgo system but will not necessariy get the go ahead they need from US authorities to purchase it. Also they will be dependent on Venezuelan crude supplies which production is facing a deepening crisis no one knows how to solve.

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  8. “So my message to chavistas is simple:”
    Mine is even simpler: “Get away from all the power positions in Venezuela, and nobody gets hurt.”

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