PdV rushes to make fuel as political walls crumble

Venezuela's state-owned PdV is scrambling to cobble together salvageable refinery parts to replenish up to 80,000 b/d of gasoline supply that is critical to the government's haphazard coronavirus response.

Under the direction of a new PdV restructuring commission, the oil company is working to restart a 61,500 b/d fluidized catalytic cracking unit (FCC) at its 140,000 b/d El Palito refinery, which has been off line since 2017.

As gasoline runs out across the country, Venezuela is at odds to distribute food and incoming aid to check the spreading virus, as well as meet the basic daily needs of the economy.

For several years, almost all of PdV's 1.3mn b/d of domestic refining capacity has not been functioning because of a lack of maintenance, spare parts and feedstock. About 80,000 b/d of gasoline would cover around two-thirds of estimated gasoline demand in Venezuela's barely functioning economy.

The PdV commission, headed by industry minister Tareck El Aissami, has appointed new refinery managers under the direction of Gabriel Oliveros, an industry veteran who was appointed vice president of refining in early March.

The El Palito unit repair, if successful, would help to absorb some of the crude that PdV has been struggling to sell, first because of sanctions-related obstacles, and now because of a market glut sparked by the breakdown of Opec+ talks and a severe virus-related economic slowdown. It is not clear where the El Palito feedstock would originate.

PdV downstream officials are developing a plan to strip usable parts from two inoperative FCCs at the 940,000 b/d CRP refining complex in Paraguana to repair the unit at El Palito, which is located in Carabobo state north of Valencia.

Among the challenges are a lack of gasoline components, including MTBE, which PdV used to import from the US before the White House imposed oil sanctions on Venezuela in January 2019.

The CRP complex encompasses the 635,000 b/d Amuay refinery and 305,000 b/d Cardon refinery. The 108,000 b/d FCC at Amuay and 86,000 b/d FCC at Cardon have been down since 2019. Amuay's crude distillation units and flexicoker also have been off line awaiting repairs since mid-2019.

Until recently, PdV had been using parts from El Palito and the 190,000 b/d Puerto La Cruz refinery in a failed attempt to restart Amuay refinery's cracker. Under the new repair directive, 40,000 b/d of gasoline would come from El Palito and another 40,000 b/d from Amuay.

But PdV's crippled financial state combined with US oil and financial sanctions have impeded imports of essential refinery parts. The company is hoping for Russian and Chinese technical support, but two local oil services sector executives said Venezuelan contractors are capable of making the repairs on their own, if PdV guarantees prompt payment.

Three previous attempts in 2018 to restart El Palito's FCC were abandoned after a fire damaged part of the unit. El Palito's desulfurization, atmospheric distillation and vacuum distillation units also have been out of service since 2017.

Some gasoline and other oil products are still trickling into Venezuela, but the volumes are insufficient to distribute dwindling food and scarce medical aid.

Breaking down barriers

PdV's refinery repair effort is driven by the imminent threat of a health catastrophe that the government of President Nicolas Maduro is ill-prepared to control. After years of failed social programs, many Venezuelans are undernourished and the public health system is almost completely broken.

A growing number of voices are now calling for the US to ease sanctions, and for the US-backed political opposition to suspend its campaign to unseat Maduro in favor of cooperation.

Colombia's conservative former president Andres Pastrana, a longtime foe of Maduro and his predecessor Hugo Chavez, said today that the current Colombian government should now "set aside politics" and work with Maduro to treat Venezuelans along the porous 2,019km shared border. He called for emergency hospitals to be built in border areas, with funding from the US, China, Russia and other countries.

Colombia is among more than 50 nations that recognize Venezuelan opposition leader Juan Guaido as the country's interim president, rather than Maduro.

There was no immediate comment from the government of President Ivan Duque, but discreet talks are already underway via international organizations, including the Pan American Health Organization.

Inside Venezuela, opposition leader and former presidential candidate Henrique Capriles, who supports Guaido, is also calling for cooperation with the de facto government in Caracas.

UN high commissioner for human rights Michelle Bachelet yesterday called for the easing or suspension of sanctions against countries such as Iran and Venezuela to help their governments better cope with the coronavirus outbreak.