Phillips 66 (PSX:US) said an international tribunal ruling supports its right to acquire a 50 percent stake in facilities at its Sweeny Refinery in Texas from Petroleos de Venezuela SA.
The International Chamber of Commerce’s Court of Arbitration last month upheld Phillips 66’s right to exercise a call option in 2009 and assume PDVSA’s interest in Merey Sweeny LP, Rich Johnson, a spokesman for the Houston-based refiner, said in an e-mail yesterday. The partnership owns a 70,000-barrel-per-day delayed coker and related facilities at the refinery.
“Certain defaults by PDVSA with respect to supply of crude oil to the Sweeny refinery triggered the right to acquire PDVSA’s 50 percent ownership interest,” Johnson wrote.
State-owned PDVSA initiated arbitration with the ICC, claiming the exercise of the call right was invalid. A PDVSA spokesman declined to comment on the ruling.
“Since there is not a lot of crude imported into the U.S. anymore, this decision hurts PDVSA on several fronts. First, the company loses the refinery and production, and secondly it loses the opportunity to bring crude into the refinery,” Oil Outlooks and Opinions LLC President Carl Larry said in an interview from Houston.
Caracas-based PDVSA is diversifying its oil and products export markets, company president Rafael Ramirez said this weekend during a conference in St. Petersburg, Russia. The company is now sending more exports to Asia than the U.S., he said.
“Even though PDVSA has the right to appeal the decision, at this point it is basically a no-win scenario for the company, since they lose the crude and product and obviously they lose the interest in the refinery. So, on all fronts it’s a big loss for PDVSA,” Larry said.
The economic crisis in Venezuela, which has the world’s biggest oil reserves, has fueled three months of protests against the government of President Nicolas Maduro that have left at least 42 people dead.
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