Venezuela gets Iranian help to fix its refineries

Venezuela's new oil authorities have enlisted Iran's help in a fresh effort to repair state-owned PdV's refineries and replenish fuel supplies.

In a wave of ongoing Mahan Air flights over the past week, Iran is delivering refinery parts, catalyzer and technicians to repair PdV's once-thriving CRP complex, which includes the 305,000 b/d Cardon refinery and 635,000 b/d Amuay refinery, the oil ministry said.

Most of the flights originate in Tehran and fly directly to the Josefa Camejo International Airport on the Paraguana peninsula.

The Iranian supplies were confirmed by the office of new oil ministry refining vice minister Jorge Sicatt, who was appointed on 23 April.

The US-backed political opposition is raising alarm bells, accusing the government of President Nicolas Maduro of forging military cooperation with a fellow US-sanctioned regime.

The oil ministry, which is now officially led by Maduro stalwart Tareck El Aissami in place of Manuel Quevedo, maintained that the Iranian assistance is "oil-related and technical, not political." El Aissami was formally appointed today along with Asdrubal Chavez who took over PdV. Quevedo held both posts since late 2017 but has been effectively carved out for months by a PdV restructuring team led by El Aissami and Chavez.

Venezuela's INAC civil aviation authority tells Argus that Mahan Air has received special government clearance to make at least 20 direct flights to ensure PdV receives all the replacement parts and technicians it needs to make the repairs.

If PdV is able to repair Cardon's 86,000 b/d fluid catalytic cracker (FCC) and Amuay's 108,000 b/d FCC and related units, it could significantly ease an acute fuel deficit that is contributing to growing unrest.

CRP-based union officials are doubtful that the units can be swiftly resuscitated because of extensive past damage as well as a lack of blendstocks such as alkylate.

"Too many units have too much damage," a senior union official said.

"The CRP processing capacity is more complex technologically and more than six times greater than El Palito which still is not operating," the official added, referring to the 140,000 b/d El Palito refinery that PdV tried unsuccessfully to repair earlier this month.

Shared grievances

Aside from historical Opec ties and shared grievances rooted in US-led sanctions, Venezuela's outreach to Iran stems from technological overlap, the oil ministry says. Shell built Cardon, and its successor Amuay was constructed by Creole Petroleum, a predecessor of Standard Oil that later grew into ExxonMobil.

"Shell and Esso, which is now ExxonMobil, were active in developing oil and building refineries in Iran," an official working with Sicatt said. "PdV and the ministry consulted with our Iranian colleagues and concluded that technologies, components and parts used in Iran's refineries are compatible with the CRP."

Diesbalo Espinoza, a retired union leader who worked 25 years at El Palito, said PdV's multiple attempts to restart the refinery's 60,000 b/d FCC failed because parts stripped from Cardon and Amuay were in poor condition. Repair crews also uncovered infrastructure damage inside the FCC and associated units dating from before El Palito was shut down in 2017, he added.

As the new repairs get underway, sporadic fuel imports continue to arrive at PdV terminals. The Cyprus-flagged E Pioneer arrived at the Guaraguao terminal in Anzoategui state today after discharging some of its gasoline cargo at the El Palito terminal.

Venezuela's fuel shortage has undermined food distribution just as the Covid-19 pandemic catches hold. Looting has broken out in numerous states. The government late last week reimposed price controls in a bid to quell social tensions.