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A refinery worker in Corpus Christi, Texas. Image courtesy of CITGO.

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Venezuela-owned, U.S. refiner CITGO posts best earnings ever, gets safety recognitions

Venezuela-owned CITGO Petroleum, one of the top five refiners in the U.S., posted soaring earnings for April-June 2022 compared with the preceding quarter while its refineries received important U.S. industry recognitions for safe operations by its more than 3,000 workers in the North American country.

CITGO reported on Aug. 11, 2022 second quarter net income of $1.3 billion compared with net income of $245 million in the first quarter of 2022.

"Our second quarter results are the best in the history of the company," said CITGO´s President and CEO Carlos Jorda.

"Reliable and safe operations helped us capitalize on favorable market conditions that were supported by excellent product cracks, high refinery utilization and lean global inventories," Jorda said.

Jorda, who started with Venezuelan state oil company PDVSA in the 1970s and held many positions before becoming CITGO´s CEO in 2019, said that during the second quarter CITGO also received “multiple safety awards” at its refineries and terminals.

During the period there were “overall crude runs exceeding nameplate capacity and resulting in 101% utilization, marking three consecutive quarters above 94%,” Jorda said.

The Lake Charles, Louisiana refinery set a new quarterly crude-throughput record of 436,000 bpd, beating the 411,000-bpd previous record run set in 2018, the Houston-based company said. 

CITGO is “on pace for record-setting occupational safety, process safety and environmental performance for 2022,” the company said. Both the Lemont, Illinois and Corpus Christi refineries received important key U.S. industry recognitions over safety, the company said.

Exports also increased. “We continued growing our exposure into South America, with refined product exports increasing to an average of 195,000 bpd from 157,000 bpd in the first quarter of 2022,” according to CITGO´s release.

The good results will reduce debt, Jorda said. The improved revenue has helped the company´s plans to pay debt ahead of maturity. Citgo announced in a separate press release on Aug. 11 it was buying up to $284 million of its debt maturing in 2024.

CITGO operates three refineries. In addition to Lemont and Lake Charles, it owns one in Corpus Christi, Texas. The company also has equity assets in U.S. terminals, pipelines, as well as lubricant and packaging plants.

With about 3,300 employees and 769,000 bpd of crude processing capacity, “CITGO ranks as the fifth-largest in the U.S.,” the company said. CITGO´s  oil products reach 4,300 locally owned fuel outlets east of the Rocky Mountains. 

Venezuelan crude oil

Petroleos de Venezuela (PDVSA) bought half of CITGO in 1986 and got additional equity in 1990. The plan was to integrate the company downstream vertically through acquiring refining and distribution capacity in the U.S., the traditional export market for Venezuelan crude.

According to a July 8, 2022 report from Reuters news agency with a Caracas dateline, Citgo´s Jorda said at the time that Citgo would like to renew Venezuelan crude imports that had been suspended in 2019 as a result of U.S. sanctions at a time marked by political confrontations and volatility.

Former U.S. President Donald Trump (2017-2021) imposed sanctions against Venezuela aimed at putting pressure on the government of President Nicolas Maduro, currently 59 years old and in office since 2013. The intention was to cut the country´s revenue from oil exports.

Reuters news agency published a report on July 2022 to inform that U.S. President Joe Biden´s administration had already authorized Eni, from Italy, and Repsol, from Spain, to restart Venezuelan crude imports. The partial Venezuelan exports restart had helped Venezuelan production begin to recover after a long and sustained decline.

The authorizations for the release of some Venezuelan oil coincided with a U.S. release of strategic oil reserves that occurred as U.S. drivers faced rising fuel costs that the U.S. President Joe Biden´s administration attributed to consequences of the Russia-Ukraine war.

Venezuelan oil fields produced at a rate of just over 700,000 barrels per day (bpd) in June 2022, the Organization of Petroleum Exporting Countries (OPEC) published in its monthly report on July 12, 2022. That compared with under 636,000 bpd in 2021, according to OPEC.

Venezuela, a country with a 28-million population, has the world´s biggest crude oil reserves, followed by Saudi Arabia.

Venezuelan oil production has sharply declined in the past decade. The country´s fields had produced over three million barrels of crude oil per day in 2013 when Maduro´s presidency started.

Maduro was preceded by former President Hugo Chavez, who led Venezuela from 1999 until his death in 2013. Maduro had been vice president under Chavez.

ICIS Petrochemical Index shows fast falling prices

ICIS, a leading independent chemicals and energy news provider with work that includes using indexes to show pricing trends, said on Aug. 9 that its benchmark Petrochemical Index known as IPEX has recorded falling prices, and that more declines may follow.

“ICIS Petrochemical Index (IPEX) is recording a collapse in commodity petrochemical and polymer prices worldwide as economic and cost pressures for the sector mount,” the company said in a press release.

“The leading indicator points to further price falls to come and significant margin pressure on some of the world's major chemical companies,” it added.

“China's stumbling economy, stricken by Covid-lockdowns, consequences of the war in Ukraine, and threatening recession have put intense pressure,” ICIS said.

"The collapse in petrochemical prices worldwide is ongoing," said Nigel Davis, editor at ICIS, according to the release.

August contract prices for the key aromatic petrochemicals, benzene and toluene, “have suffered steep falls having risen strongly in recent months on tight availability,” he added.

The declines represent a “major correction” for aromatics, or commodities used to make nylon, polystyrene and polyesters, flexible foams, such as memory foam used in bedding, and insulation. The correction came sooner than analysts had anticipated, ICIS said.

By Reuters Events Downstream