PdV Clings To Sliver Of Oil Refining Capacity

(Argus, 6.Sep.2019) — Venezuela’s national oil company PdV has lost almost all capacity to refine crude, with only a sliver of the 635,000 b/d Amuay plant currently in operation, according to internal company reports seen by Argus.

At the end of August, Amuay was processing 120,000 b/d or about 9pc of PdV’s nameplate domestic refining capacity of 1.3mn b/d.

PdV operates Amuay in conjunction with the nearby 305,000 b/d Cardon refinery on the Paraguana peninsula. But Cardon as well as the 140,000 b/d El Palito and 190,000 b/d Puerto La Cruz refineries were off line in August, the PdV reports indicate.

PdV’s broken refining system, together with US oil and financial sanctions that impede imports, is manifested in widespread fuel shortages.

PdV has failed to persuade its leading partners in Orinoco joint ventures, Russia’s Rosneft and China’s CNPC, to accept minority stakes in the refineries in exchange for financial and technical support to salvage them.

A project to upgrade the Puerto La Cruz refinery, officially launched more than a decade ago, is stalled because PdV has not paid its Korean-Chinese contractor Hyundai-Wison, the documents note.

PdV says the Puerto La Cruz deep-conversion project upgrade will be completed before the end of 2020, but the price tag has ballooned to over $9bn from about $4bn in 2008.

All of PdV’s refineries suffer from a feedstock deficit, unstable industrial services, labor flight and chronic equipment breakdowns that PdV has been unable to repair for lack of spare parts. The company reports indicate that much of the equipment is beyond repair.

PdV’s “socialist” emergency crews are working to restore refining capacity by jury-rigging repairs of key units such as Amuay’s distillation towers and its fluidized catalytic cracker.

Amuay’s idle units include four of five distillation towers with a combined capacity of over 500,000 b/d, plus 258,000 b/d of hydrodesulphurization capacity, a 62,000 b/d flexicoker and butane isomerization and hydrogen reformer units. Amuay’s 104,000 b/d FCC is operating at about 40pc of capacity.

At Cardon, downed equipment includes an 86,000 b/d FCC, 305,000 b/d of distillation capacity, 185,000 b/d of hydrodesulphurization and hydrotreatment capacity, and alkylation and delayed coking units.

El Palito has been shut down since a 2017 fire damaged its 61,500 b/d FCC. Frequent attempts last year to restart various downed units were unsuccessful and the effort was abandoned as PdV focused its dwindling downstream resources on keeping the key CRP complex in operation.

Among the problems undermining PdV’s once-extensive refining system is the pillage of copper and steel parts for sale in the black market for scrap metal.

Outside of Venezuela, PdV is losing key refining assets as well. The company’s US refining subsidiary Citgo is now administered by Venezuela’s political opposition, and revenue blocked by US sanctions. And its long-term lease on the 335,000 b/d Isla refinery in Curacao ends in December. The island’s Dutch-controlled government is negotiating with German refiner Klesch for a new operating lease.

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