PdV, CNPC boost blending capacity

Venezuela's state-owned PdV inaugurated the expansion of its PetroSinovensa crude-blending joint venture with China's state-owned CNPC.

The nameplate capacity of the plant increased from 105,000 b/d to 165,000 b/d, boosting supply of 16°API Merey crude favored by Chinese refineries.

PetroSinovensa, in which PdV holds a 50.1pc stake and a CNPC 49.9pc share, blends extra-heavy crude from the Orinoco oil belt with domestic light grades such as Mesa and Santa Barbara to yield the Merey blend. All of the plant's production goes to China, according to Venezuela's oil ministry.

PetroSinovensa's ability to boost blending operations hinges on domestic crude production, which averaged around 750,000 b/d in June, nearly half the level of a year earlier. According to an internal PdV report this morning, PetroSinovensa was processing only around 95,000 b/d.

PdV imported a cargo of Nigerian light sweet Agbami crude in April to top off domestic supply for blending, and is now seeking more, a PdV official told Argus.

Over half of the exports from PetroSinovensa go toward servicing Chinese oil-backed loans to Venezuela's government and PdV. About $16bn of up to $60bn in such loans is still outstanding, according to Venezuela's central bank.

The capacity expansion was executed under a turnkey contract by China Huanqiu Contracting and Engineering and financed through a $4bn oil-backed loan that China Development Bank granted to PetroSinovensa in 2014, the oil ministry said.

PetroSinovensa is located at PdV's Jose complex in Anzoategui state, with Orinoco extra-heavy crude supplies produced in the Morichal district of the oil belt's Carabobo section, the ministry said.

The expansion of PetroSinovensa coincides with the partial restart of PdV's PetroPiar heavy crude upgrading joint venture with Chevron. The plant, originally designed to produce synthetic crude for the US market, was handling about 125,000 b/d as of this morning, stripping out around 25,000 b/d of diluent, to produce more Merey.

PetroPiar is the focus of growing attention because Chevron, PdV´s 30pc partner, could be forced to pull out of Venezuela if a US sanctions waiver is not extended on 27 July.

PdV's three other upgraders at Jose — PetroMonagas, PetroCedeno and Petro San Felix — are off line.