China joins Iran in PdV quest to repair refinery

The governments of Iran and China are working closely with Venezuelan state-owned PdV to restart the 940,000 b/d CRP refining complex and replenish nearly exhausted fuel supply.

The refinery repair work is quietly carrying on against the tumultuous backdrop of a foiled coup plot over the weekend, giving President Nicolas Maduro a political edge over his US-backed foes in the opposition.

Iranian state-owned Mahan Air has made 16 direct flights since 22 April from Tehran to Josefa Camejo international airport near the CRP on the Paraguana peninsula, bringing in catalyst, refinery parts and technicians from Iran and China, according to five PdV and oil ministry officials with direct knowledge of the ongoing airlift operation between the Chinese city of Chengdu, Tehran and Paraguana.

Venezuela's INAC commercial air authority has authorized Mahan Air to make up to 20 direct flights from Tehran to Paraguana, but additional flights will be approved "as needed," a senior INAC official tells Argus.

Chinese state-owned CNPC subsidiary Jichai Power Equipment Company in Chengdu is among the Chinese firms shipping compressors, refinery parts and technicians to Paraguana with Mahan Air, an oil ministry official said.

China also is supplying PdV with catalyst because Iran does not produce enough of the substance to fully supply the needs of its own refineries, the ministry official added.

Iranian state-owned engineering company Khatam al-Anbiya, a US-sanctioned entity affiliated with the Islamic Revolutionary Guard Corps (IRGC), is also supplying PdV with refinery parts and technicians, the official added.

Local Chinese diplomatic and CNPC officials declined to comment on the downstream cooperation. Iran's embassy in Caracas did not respond to three telephone requests seeking comment.

US-sanctioned Mahan Air has delivered about 700 tons of Iranian and Chinese catalyst since 22 April, a PdV downstream official at the CRP refining complex said by telephone. Among the delivered parts are compressors and pumps, the oil ministry said.

Mahan Air has set up an "air bridge operation" that extends from Chengdu through Tehran to Paraguana, according to a member of Venezuela's PdV restructuring commission.

"In some instances, cargoes have been transferred from flights arriving in Tehran from Chengdu to flights leaving Tehran immediately for Venezuela," the commission official said. "We're confident we can restart the CRP's gasoline production operations soon with the assistance of our Iranian and Chinese partners."

The flights are returning immediately to Tehran within hours after landing in Paraguana, according to a CRP union official who claims to be in "permanent contact" with workers at the heavily militarized airport.

The cooperation was brokered directly by new acting oil minister Tareck El Aissami, who also heads the restructuring commission, ministry and PdV officials said.

Aissami's commission co-chair, acting PdV chief executive Asdrubal Chavez, also participated in the refinery repair discussions.

The Maduro government is paying Mahan Air and suppliers of catalyst, parts and technical support in Iran and China with gold bullion from the Central Bank of Venezuela.

A Venezuelan central bank official confirmed reports that over nine tons of gold valued at more than $500mn have been shipped from Venezuela to Iran since the airlift started on 22 April.

PdV repair crews supported by Iranian and Chinese technicians currently are focusing efforts on restarting up to 86,000 b/d of gasoline production at the 305,000 b/d Cardon refinery, which together with the 635,000 b/d Amuay refinery comprises the CRP refining complex that PdV has operated as a single integrated facility since 1997.

After Cardon resumes crude processing, the Iranian and Chinese technicians will support PdV's efforts to restart Amuay and the 140,000 b/d El Palito refinery in Carabobo state, the oil ministry said.

Skepticism

The CRP, which accounts for about 72pc of PdV's crippled domestic refining capacity of 1.3mn b/d, was once considered a world-class facility. The complex has a combined 42 crude processing units including 10 distillation towers, nine vacuum distillation units, nine hydrotreaters, two fluidized catalytic crackers, three deep conversion units, three alkylation units, two isomerization units, three MTBE/TAME units, and one catalytic naphtha reformer.

The CRP also has lubricants, asphalt and sulfur production units, plus over 57.3mn bl of combined crude and refined products storage capacity.

"Almost all of the CRP's crude processing units are currently shut down, with a handful at about 10pc of their nominal capacity," a senior oil union official at Cardon said.

Despite the intensive airlift operations, union officials at the CRP remain skeptical that PdV can restore gasoline production in the near term.

"The CRP is engineered to operate as an integrated unit, which means all of its processing units must be operational to assure safe and sustained fuel production," a senior union official said.