Neste stated last week that it has written off its holding in Nynas, an admission of the difficulties that the joint venture faces under economic sanctions against Venezuela.
Neste officials said they still hope to revive Nynas, a 50-50 partnership with Petroleos de Venezuela S.A. and the worlds second-largest marketer of naphthenic base stocks. But the write-down means the Finnish refiner no longer estimates its stake in Nynas to have any value.
As they have previously, Neste officials noted that Nynas has been hurt by United States economic sanctions aimed at isolating the government of Venezuelan president Nicolas Maduro. In an earnings report filed Oct. 23, Neste said Nynas lost 8 million (U.S. $8.9 million) during its third quarter because the sanctions impair its ability to acquire crude oil feedstock.
Neste said it wrote down its remaining 34 million in assets in Nynas, along with a shareholder loan of 59 million. During a conference call with investment analysts, Chief Financial Officer Jyrki Mikael Maki-Kala said Nynas continues to operate but will no longer have a financial impact on Neste.
Nynas owns naphthenic base oil plants in Harburg, Germany, and Nynashamn, Sweden. It also produces bitumen and owns a third refinery in Gothenburg, Sweden, and a joint venture facility with Shell in Eastham, United Kingdom.
Making naphthenic base stocks requires naphthenic crude, and Nynas has traditionally bought much of its feedstock from PdVSA. The U.S. sanctions against Venezuela bar such purchases, but Nynas had operated under a series of licenses allowing it to buy crude from Venezuela. On Oct. 17, the U.S. Treasury Department issued a new license that prohibits Nynas from buying oil or oil products from Venezuela. Neste said last week that Nynas has ceased purchases of Venezuelan crude.