Valero Seeks U.S. Approval to Import Venezuelan Oil

By Marianna Parraga and Matt Spetalnick Reuters March 30, 2023

HOUSTON/WASHINGTON, March 30 (Reuters) – Valero Energy Corp VLO.N, the second-largest U.S. oil refiner, is seeking Washington’s permission to import Venezuelan crude, according to four people close to the matter, hoping for a repeat of the approval granted to Chevron Corp in November after a four-year ban.

President Joe Biden’s administration has eased some U.S. sanctions on the OPEC-member nation in an effort to encourage a political dialog with the country’s opposition. That has led to further pressure from U.S., European and Asian energy firms, but Washington has resisted any additional major steps for now.

Venezuelan oil resumed flowing to the U.S. in January under a Treasury Department license granted to Chevron that allowed it to expand output there and export the oil. Refiners including Valero and Phillips 66 have bought cargoes from Chevron, according to U.S. Customs and shipping data.

The Chevron decision came as part of negotiations for humanitarian aid and a presidential election. But efforts to fund the aid by releasing Venezuela’s frozen money abroad have stalled and no new talks have been scheduled since that time.

Colombia’s President Gustavo Petro tweeted this week that the U.S. has agreed to attend an international conference on Venezuelan democracy to be held in Bogota.

CHEVRON-STYLE EXEMPTION

Valero is asking the Treasury for a Chevron-style exemption from sanctions and allow it to directly purchase crude from Venezuela’s state-run oil company PDVSA, said one of the sources, who is based in Washington.

Other details of the Valero request were not immediately known. No decision appears imminent, the source said, signaling that the U.S., for now, does not want to be seen further easing Venezuela sanctions until President Nicolas Maduro makes political concessions to Venezuela’s opposition.

Before oil sanctions were imposed on PDVSA in 2019, Valero was among the U.S. top three receivers of the South American country’s crude through long-term supply contracts that have not expired.

A Valero spokesperson said the company has not contacted the U.S. Treasury Department for permission to import Venezuelan oil.

“I am told that we have not applied for a license,” said spokesperson Lillian Riojas.

PDVSA did not reply to requests for comment. The Treasury Department declined comment.

The U.S. has banned all cash payments to Maduro’s administration under its easing of sanctions. Chevron’s license – and approvals granted to European firms Eni ENI.MI and Repsol REP.MC – allow only for oil or debt swaps.

‘NO NEW LICENSES’

“The United States provided targeted, time-limited sanctions relief to support efforts to restore democracy and alleviate the suffering of the Venezuelan people,” said a spokesperson for the White House National Security Council, referring to the six-month license granted to Chevron in November.

“We have no new licenses to announce or preview,” the spokesperson added.

Chevron’s resumption of Venezuelan crude imports has not led to an increase in the country’s overall exports this year, according to PDVSA schedules and Refinitiv Eikon data. The No. 2 U.S. oil company exported some 86,000 barrels per day of Venezuelan oil in February.

PDVSA’s new boss Pedro Tellechea in January suspended most oil supply contracts while reviewing payments for past shipments. That suspension has recently brought Venezuela’s exports almost to a halt, with only four customers – Chevron, Iran, Cuba and Hangzhou Energy – authorized to lift cargoes.

The investigation into payments and disclosure of $21.2 billion in commercial accounts receivable since 2020 this month prompted the resignation of powerful Oil Minister Tareck El Aissami and the arrest of top PDVSA officials.

https://gcaptain.com/valero-seeks-u-s-approval-to-import-venezuelan-oil/

Look here (indictment) not there: Potato

Biden Leaves Market And Military Unclear About Strategic Oil Reserve

John Konrad March 28, 2023

The Biden administration’s inconsistent approach to the Strategic Petroleum Reserve (SPR) has raised concerns and intensified skepticism among oil producers and tanker owners. Initially, the White House proposed refilling the SPR at specific oil prices (between $67 and $72 per barrel) aiming to strike a balance between supporting the industry and protecting consumers. However, crude oil prices have since dipped below $70 and recent statements by Energy Secretary Jennifer Granholm and Biden’s energy security adviser, Amos Hochstein, suggest a wavering commitment to this strategy.

This uncertainty coincides with the fallout from Silicon Valley Bank’s collapse, which significantly impacted oil futures. Amid this chaos, there was an opportunity for the Energy Department to refill the SPR and signal support for domestic oil producers. Still, the administration’s contradictory messaging has left the oil markets unclear about its intentions.

“The story here is not that complicated,” today wrote a Liam Denning, the Bloomberg Opinion columnist covering energy, mining and commodities. “Bank failure and fear of contagion hit risk assets of many types. Money managers stampeded out of oil-price bets at a pace that would do SVB’s depositors proud. Rory Johnston, who writes the Commodity Context newsletter, calculates speculative open interest in crude contracts fell during the two weeks through March 21 at its fastest pace on record. Net speculative length collapsed to its lowest level since March 2020. In other words, this was the sort of blood-on-the-streets moment where buyers with a cool head and cash on hand could swoop in. Like an Energy Department nominally seeking to refill the SPR and signal support to domestic oil producers, for example.”

Glad to see the growing scrutiny of The White House leaving the SPR un-refilled, despite having sold a lot of oil and indicated plans to repurchase at lower prices. https://t.co/Phhg2R1LTr

— Joe Weisenthal (@TheStalwart) March 28, 2023

But the Department of Energy did not swoop in and it’s uncertain when it will.

According to Denning about 75% of the 180 million barrels released from the SPR have already been “refilled” by canceling future Congress-mandated sales. However, a gap of 40 million barrels remains, which will grow to over 60 million this year as the last of the mandated sales are executed.

“Biden’s energy policy is a high-wire act balancing green objectives with the demands of energy security today,” writes Denning. “As with the recent approval of the Willow oil project in Alaska, the president will draw fire from within his own party’s ranks for anything that looks friendly to fossil fuels. Yet the underlying logic of using the SPR to modulate the market is sound green politics, too. As last year’s brush with $5 pump prices, and Biden’s response, demonstrated, he is apparently aware that letting oil supply drain ahead of demand is a good way to lose power before an energy transition can take hold.”

“Why else make a show of the new approach on the SPR in the first place?”

And then there is the strategic importance of oil reserves. In the current situation affecting the global tanker markets – tight supply accompanied by high charter rates – is being driven by the conflict in Ukraine and headlines show the difficulty countries around the world are having sourcing energy. A conflict with China would have more dramatic consequences for the markets. There would be significant but unpredictable impacts on oil markets, tanker markets, and trade flows upon which to base assumptions on tanker availability.

“In the event of a broad conflict with China in the Pacific theater, the U.S. will likely lose reliable access to the currently relied-upon sources of oil within the Pacific region,” wrote Captain Stephen M. Carmel, Senior VP at Maersk Line Limited, in a recent article on oil security. “The U.S. will then need to manage exceedingly long lines of supply to ensure oil flows to the forces in the greatly increased quantities demanded by a wartime operational tempo.”

More:

https://gcaptain.com/biden-leaves-market-unclear-about-strategic-oil-reserve/

North Korea Unveils New Nuclear Warheads as USS Nimitz Arrives in South

By Hyonhee Shin and Daewoung Kim Reuters March 28, 2023

SEOUL/BUSAN, March 28 (Reuters) – North Korea unveiled new, smaller nuclear warheads and vowed to produce more weapons-grade nuclear material to expand its arsenal, state media said on Tuesday, as a U.S. aircraft carrier arrived in SouthKorea for military drills.

North Korea’s Korean Central News Agency (KCNA) released photos of the warheads, dubbed Hwasan-31s. Leader Kim Jong Un visited the Nuclear Weapons Institute and inspected new tactical nuclear weapons and technology for mounting warheads on ballistic missiles, as well as nuclear counterattack operation plans, KCNA said.

Nuclear experts said the images could indicate progress in miniaturizing warheads that are powerful yet small enough to mount on intercontinental ballistic missiles capable of striking the United States.

“It has something more powerful in a smaller space. That’s worrisome,” said Kune Y. Suh, professor emeritus of nuclear engineering at Seoul National University, comparing the new warheads to the 2016 version.

Kim Dong-yup, a former South Korean naval officer who teaches at Kyungnam University, said the images appeared to show “a miniaturized, lightweight and standardized warhead” intended for use with at least eight different delivery platforms listed in posters on the wall, including missiles fired from submarines.

“Now that the delivery vehicles are nearly ready, they would churn out warheads to secure second strike capabilities – perhaps hundreds, not dozens – while running centrifuges even harder to get weapons-grade nuclear material,” he said.

Kim Jong Un ordered the production of weapons-grade materials in a “far-sighted way” to boost its nuclear arsenal “exponentially” and produce powerful weapons, KCNA said.

He said the enemy of the country’s nuclear forces was not a specific state or group but “war and nuclear disaster themselves,” and the policy of expanding the arsenal was solely for defensive purposes and regional peace and stability.

U.S. EXERCISES

In Washington, White House national security spokesperson John Kirby said the United States remained willing to discuss verifiable denuclearization of the Korean peninsula, but North Korean had shown no desire for such talks.

“So we will continue to make sure that we have the appropriate military capabilities and the appropriate readiness to use those capabilities if need be, to protect our national security interests and those of our allies,” he said, referring to large-scale military exercises underway with South Korea.

Kim was also briefed on an IT-based integrated nuclear weapon management system called Haekbangashoe, which means “nuclear trigger,” whose accuracy, reliability and security were verified during the simulation of a nuclear counterattack, KCNA said.

North Korea fired short-range ballistic missiles on Monday and conducted a nuclear counterattack simulation last week against the U.S. and South Korea, which it accused of rehearsing an invasion. A commentary in North Korea’s Rodong Sinmun said the U.S.-South Korea military exercises amounted to “an open declaration of war.”

KCNA said the North Korean military simulated a nuclear airburst with two tactical ballistic missiles equipped with mock warheads and tested a nuclear-capable underwater attack drone.

It said the Haeil-1 drone reached a target in waters off the northeast coast after cruising along a “jagged and oval” 600km (373-mile) course for more than 41 hours.

South Korean President Yoon Suk Yeol said Pyongyang did not deserve “a single penny” of economic aid while pursuing nuclear development, his spokesman said.

A South Korean military spokesman said additional analysis would be needed to verify whether North Korea’s new warheads were deployable. He said the report on the underwater drone was most likely “exaggerated and fabricated.”

U.S. CARRIER STRIKE GROUP

On Tuesday, a U.S. carrier strike group led by the Nimitz docked at South Korea’s Busan naval base after joint drills. It was the carrier’s first visit in nearly six years and coincides with the 70th anniversary of the U.S.-South Korea alliance.

South Korean Rear Admiral Kim Ji-hoon said the joint exercises were intended to improve U.S. extended deterrence – a reference to the U.S. nuclear umbrella protecting its ally – given the evolving North Korean threat.

The strike group commander, Rear Admiral Christopher Sweeney, said his ships were prepared for any contingency.

“We don’t seek conflicts with (North Korea). We seek peace and security. We’re not going to be coerced, we’re not going to be bullied and we’re not going anywhere,” he told reporters.

https://gcaptain.com/north-korea-unveils-new-nuclear-warheads-as-uss-nimitz-arrives-in-south/

>>18610926

Methinks he has no way to refill it, even if he wanted to