PdV to tap fractionator to replace imported naphtha

Venezuela's national oil company PdV is seeking to adapt its infrastructure to cope with a shortage of imported naphtha that is hindering heavy crude production and exports.

The company said it plans to build two small pipelines at its Jose industrial complex to supply its 210,000 b/d PetroPiar heavy crude upgrader with up to 5,000 b/d of residual naphtha stripped from gas liquids at the nearby 200,000 b/d Jose fractionator.

PetroPiar, in which Chevron holds a 30pc stake, is one of three joint-venture upgraders at Jose that have been off line since mid-May because of a lack of feedstock and equipment problems. A fourth upgrader, PdV's wholly owned Petro San Felix, has been shut down for more than a year.

The residual naphtha that PdV's gas subsidiary PdV Gas would supply from the fractionator would be used to dilute extra-heavy crude production from the Orinoco oil belt.

The initiative is part of PdV's wider effort to expand production of 16°API Merey blend for the Chinese and Indian markets, effectively displacing the synthetic light and medium crude that the upgraders used to produce mostly for US refineries.

The US market, historically the main destination for Venezuelan oil exports, has been closed to Venezuela since late January because of US oil sanctions, which also cut off US supply of diluent to the Venezuelan market. In response, Venezuela is seeking to adapt its infrastructure and operations to focus on the Asian market.

Internal PdV documents seen by Argus show that Merey accounts for almost 90pc of July's projected crude exports of about 850,000 b/d.

PdV Gas has been using tanker trucks since December 2017 to transport limited volumes of residual naphtha from its Jose fractionator to the PetroPiar, PetroMonagas and PetroCedeno upgraders. But the flows have been frequently disrupted by a lack of spare parts for its tanker truck fleet.

The twin pipelines that would run around 4km from the fractionator to Petropiar will stabilize residual naphtha deliveries and reduce transport-related costs which PdV Gas has been subcontracting to local private tanker truck operators at exorbitant costs, an oil ministry official said.

Within a year PdV expects to raise initial naphtha deliveries to Petropiar to a combined 24,000 b/d of residual naphtha, natural gasoline and pentane stripped from associated gas liquids extracted from the Jusepin and Santa Barbara oil fields in Monagas state and the San Joaquin oil field in Anzoategui, a PdV Gas official tells Argus.

PdV projects that the over 1.82mn bl per year of naphtha produced at the fractionation complex will offset naphtha annual import costs of over $144mn. Boosting residual naphtha, natural gasoline and pentane supplies to 24,000 b/d within 12 months will generate total yearly import savings of over $690mn, the oil ministry said.

These PdV estimates are based on the ability of PdV Gas to operate the fractionator at over 90pc of its 200,000 b/d nameplate capacity, a skeptical oil union official at the Jose complex cautioned.

PdV Gas declined to disclose the current operational capacity of the fractionator, but

the oil union official said "none of PdV's principal assets currently operate at over 50pc of nameplate capacity." The official also cautioned that the volume of associated gas liquids supplied to the Jose plant are restricted by significantly lower crude output in PdV's oil fields in Anzoategui and Monagas states.

A PdV Gas official said privately that rich gas production is insufficient to produce steady flows of natural gasoline, and warned of potential construction delays in Jose because of a lack of personnel and equipment.