Venezuela Restarts Problematic Refinery To Meet Gasoline Goals

(Bloomberg, 9.Sep.2021) — Venezuela is pushing to restart a key gasoline refinery despite questions over ongoing maintenance problems as it attempts to double fuel production to fill a shortage that has caused long lines at pumps across the country.

State oil firm PDVSA began partial operations in three units at El Palito refinery in central Venezuela this week and will start two more units by the end of the month, said Jose Joaquin Vargas, a member of the company’s refining committee. The plant has not yet started producing fuel, according to a person with direct knowledge of the plan.

The units, which have been closed since the end of last year, are still undergoing water and ventilation repairs, prompting doubts about their efficiency and stability, according to three people with direct knowledge of the work who spoke on the condition of anonymity. El Palito, which has the capacity to refine 140,000 barrels a day, has been operating on and off after repairs last year were unsuccessful. 

President Nicolas Maduro’s government is pushing PDVSA to restart the refinery as the country’s economy reopens from pandemic lockdowns and residents and businesses use more fuel. Hampered by the impact of U.S. sanctions and a lack of basic maintenance and investment, refineries in the country are only producing about 60,000 barrels a day of gasoline, diesel and other fuels, roughly 5% of the country’s refining capacity. 

Domestic demand, on the other hand, is at about 120,000 barrels a day. Despite sitting atop the world’s largest crude reserves, Venezuela had been forced to import refined products. With sanctions banning PDVSA’s Citgo from shipping products from the U.S., shortages have hit hard.  

“Local fuel demand has doubled during this year, it’s an important indicator of the economic recovery,” Maduro said in a Sept. 5 interview on state television. “Within weeks we’ll be in the phase of doubling fuel production to alleviate this issue.”

Across the country, Venezuelans push their cars in day-long lines to fill up empty tanks at stations where government-subsidized gas costs $0.01 per gallon. Those with access to U.S. dollars don’t have to wait in lines, but pay an average of $2.27 per gallon. 


By Fabiola Zerpa