Russian, Chinese techs: Mothball most PdV refineries

Russian and Chinese refinery experts evaluating state-owned PdV's Venezuela refineries concluded that three of the four facilities should be shut down and only one is recoverable, a senior official with the federation of oil unions (Futpv) told Argus.

Chinese refinery executives that assessed the 190,000 b/d Puerto La Cruz refinery concluded that it can be salvaged operationally, but only with significant investments, according to the oil union official.

But Russian and Chinese downstream experts that separately assessed PdV's other local refineries — the 635,000 b/d Amuay refinery, the 305,000 b/d Cardon refinery and the 140,000 b/d El Palito — concluded they are in such poor condition that it would be more cost effective in the long run if all three facilities are mothballed and replaced with new refineries.

PdV's local refineries have a combined nameplate capacity of 1.3mn b/d but they are currently operating at roughly 25pc of nameplate capacity, the Fuptv official said.

CNPC refinery executives found that core infrastructure and crude processing units at Puerto La Cruz in Anzoategui state are recoverable if up to $12bn in financing can be raised to cover the costs of rebuilding existing units and installing new units capable of processing heavier crude from the Orinoco oil belt.

The Puerto La Cruz outlook briefly fueled hopes at the energy ministry and PdV that the Chinese oil company would accept a proposed ten-year lease to operate the refinery in partnership with Hyundai of South Korea. But CNPC balked at PdV's insistence that the Chinese and South Korean operators fully cover the projected $12bn cost of the upgrades.

Russian state-controlled Rosneft and Chinese state-owned PetroChina similarly rejected PdV's proposal to hand over operational control of the refineries under ten-year leases renewable for an additional ten years.

The estimated $10bn price tag to complete major turnarounds at Amuay and Cardon motivated PdV's Russian and Chinese partners to reject the leases they offered, the oil union official said.

Local Russian and Chinese diplomatic officials separately confirmed the accuracy of the union official's description of why PdV's offer to lease out its refineries was rejected.

PdV and the energy ministry declined to comment.