Venezuela refinery explosion boosts prospects for US Gulf refiners


HOUSTON -- A lethal blast at Petroleos de Venezuela S.A.’s giant Amuay refinery is boosting the shares of US refiners well positioned to send fuel products to the oil-rich South American country.

Shares of Valero Energy, the largest independent refiner in the US by market value, went up 5.23% to $30.77 on Monday.

The San Antonio company has a large presence in the US Gulf Coast, from where it shipped overseas about 9% of the gasoline and diesel it produced in the second quarter, mainly to Latin America and Europe.

Shares for rival Marathon Petroleum, which has a large refinery in Louisiana and a smaller one in Texas, went up 2.46% to $49.95. Phillips 66, which also has Louisiana facilities, saw its shares jump 1.6% to $42.01 early in the morning, although it later pared its gains to $41.38, up 0.05%.

The increases come even as these and other refiners are shutting down their facilities in the northern Gulf Coast in preparation for the arrival late Tuesday of Tropical Storm Isaac, which is expected to strengthen into a hurricane.

The blast, which took place Saturday in the 640,000 bpd Amuay refinery in western Venezuela, killed at least 41 people and destroyed storage tanks and hundreds of nearby homes.

Government officials said Sunday the refinery can be restarted in two days once the blaze is extinguished, but on Monday the fire still raged.

Analysts with Tudor, Pickering, Holt & Co. said in a research note that the government's assessment is “at a minimum too early to be fully relied upon.” The analysts said that an outage could help lift US Gulf Coast refining margins.

The region’s refiners have been increasing output in recent quarters to offset lower volumes coming from Venezuela's refineries, which have been hobbled by maintenance issues. The oil-rich nation is also sending more of its supplies to allies in Latin America and China.

The US Energy Information Administration said that Venezuela accounted for just 1.8% of US petroleum-product imports last May, far below the recent peak of 11% in March 2006. Since then, the US has become a net exporter of refined products as production capacity has expanded while domestic demand has dropped.

Analysts with Simmons & Co. said Amuay’s refinery operating units don't seem affected by the fire, and they could theoretically be “restarted fairly quickly.”

But whether the refinery can return to normal rates with a reduced storage capacity is in doubt, the analysts said, adding that “the outage has reportedly forced” state-owned PdVSA to buy products from US refiners.

Those purchases “should be supportive of near-term product prices and refining margins,” the Simmons analysts said.

Dow Jones Newswires

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