Published On: Thu, Apr 28th, 2016

Venezuela oil refineries face operating woes, PDVSA launches tenders

pdvsa2HOUSTON - Venezuela’s key Paraguana oil refining complex was this week operating around half capacity, prompting state-run oil company PDVSA to launch purchase tenders for products as it tries to offset power outages and equipment failures.

While Amuay’s fluid catalytic cracker (FCC) restarted on Monday, the 645,000 barrel-per-day refinery was operating at only around 360,000 bpd as its flexicoker remained down, union boss and fierce government critic Ivan Freites said on Tuesday.

The adjacent 310,000 bpd Cardon facility was processing around 110,000 bpd, added Freites, citing Monday’s internal report of Venezuela’s top refineries in the wind-swept Paraguana peninsula.

Output has dropped at the crisis-hit OPEC country’s refineries in recent months, with critics blaming shortages of spare parts, lack of maintenance, and a shaky electrical grid.

“At the weekend we were producing at around 25 percent, nothing more,” lamented a worker at Amuay.

A shipper close to Venezuela’s exports said the Paraguana refineries’ processing rate was at historical lows in early April.

PDVSA often blames problems on saboteurs seeking to subvert the socialist government. The company did not respond to a request for comment.

More tenders, fewer exports

In the last few months, Venezuela’s oil product imports have grown while exports to key customer United States have fallen.

PDVSA launched tenders to buy at least 300,000 barrels of catalytic naphtha and 300,000 barrels of high-sulfur diesel (HSD) for May delivery.

Caracas-based PDVSA also told participating companies it could extend the purchase to a total of five cargoes.

Loading delays at ports have also compounded Venezuela’s exports problems.

The malfunctioning of several loading arms at Jose port has led to a backlog of tankers for the last month, according to a union leader and Thomson Reuters data.

“I do not see how they (PDVSA) can get much lower with exports of refined products,” said a trader with a company that sells products to PDVSA.

As in much of Latin America, Venezuela’s oil production and exports are declining. Crude output fell 11.9 percent to 2.53 million bpd in the first quarter of 2016 compared with the same period of 2014, according to OPEC numbers compiled by Reuters.

In addition, Venezuela’s steep economic recession has crimped PDVSA’s ability to pay contractors and service companies.

This month, U.S. oil services firm Halliburton Co and Schlumberger, the world’s No. 1 oil services company, said they were curtailing or reducing activity in Venezuela.

Growing crime and emigration due to low salaries are also expected to weigh on Venezuelan oil output.

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