PdV halts upgrading, plots shift to blending

Venezuela's heavy crude upgraders have suspended operations while state-owned PdV plots a shift to less complex crude blending.

According to an internal PdV report obtained by Argus, the PetroMonagas, PetroCedeño and PetroPiar joint ventures are currently in recirculation mode amid storage constraints. PetroSinovensa, PdV´s heavy crude blending joint venture with China´s state-owned CNPC, is partially operating at 105,000 b/d as a security precaution amid overheating in furnace lines, the report showed.

PdV´s exports have slowed significantly as a result of US oil sanctions that effectively cut off Venezuela´s main export market starting at the end of January. China and India have picked up most of the barrels that used to go to the US, but the pace of exports is falling short of production.

PdV operates the upgraders in conjunction with foreign minority partners: Russia´s state-controlled Rosneft in PetroMonagas; France´s Total and Norway´s Equinor in PetroCedeño; and Chevron in PetroPiar.

PdV wholly owns a fourth upgrader, Petro San Felix, which has been off line since last year.

The four upgraders have a design capacity to produce more than 600,000 b/d of synthetic crude grades such as 26°API Hamaca.

Naphtha used to dilute the Orinoco crude is also subject to US sanctions, further restricting operations. Because of chronic equipment breakdowns caused by a lack of maintenance and feedstock shortages, PdV is moving toward transforming the upgraders into less complex blending facilities, a senior PdV official tells Argus. The shift will phase out lighter synthetic grades in favor of 16°API Merey, the blend favored by Indian and Chinese refiners.

PdV recently imported a cargo of Nigerian light sweet Agbami crude for blending to make up for a shortage of domestic production of light grades such as Mesa and Santa Barbara.

PdV´s joint venture partners routinely decline to comment on their Venezuelan operations.

The upgrading and blending of Venezuela´s heavy crude takes place at the Jose industrial and export complex in Anzoátegui state. The crude is produced in the Orinoco heavy oil belt, which accounts for most of the Opec country´s production.

Venezuela is currently producing around 800,000 b/d of crude from all of its divisions, but PdV will soon need to reduce production by as much a 200,000 b/d to cope with the backlog unless exports pick up, the official said.

At the Jose terminal, one vessel is currently waiting to load Merey blend on behalf of Rosneft.

Washington is leading a campaign to unseat Venezuelan President Nicolas Maduro, who was inaugurated for a second term in January based on a May 2018 election that was widely deemed a fraud. His government has been cracking down on the opposition-led National Assembly since a failed 30 April uprising. The first vice president of the assembly, Edgar Zambrano, was the latest opposition figure to be imprisoned this week, while other lawmakers have taken refuge in foreign embassies.