PdV, Sulzer to swap refinery work for products

Venezuelan state-owned PdV is preparing to sign a barter agreement with Swiss contractor Sulzer to repair its refineries in exchange for the supply of fuel oil, asphalt and petroleum coke, according to presidential palace, oil ministry and PdV officials in Venezuela.

The pending agreement is PdV's second such arrangement in recent weeks with contractors based or partly based in China and Russia, the embattled Venezuelan government's two leading international patrons.

PdV has a nominal 1.3mn b/d of refining capacity in Venezuela, but almost all of it is inoperable because of years of underinvestment and a lack of spare parts and feedstock.

Under the planned contract, Sulzer would work alongside Chinese contractor Wison Engineering, which signed a separate downstream barter agreement with PdV at the end of July.

Sulzer's office in Switzerland did not immediately reply to a request for comment. An official in the company's Bogota office said the firm could not work in Venezuela from the Colombian affiliate because of US sanctions.

The contractors are expected to prioritize repair of the 940,000 b/d CRP refining complex, once considered a world-class downstream complex. The facility, located on the Paraguana peninsula in Falcon state, consists of the 635,000 b/d Amuay and nearby 305,000 b/d Cardon refineries.

Russian group Renova holds a minority 48.83pc stake in Sulzer since April 2018.

Moscow and Beijing continue to recognize Venezuelan president Nicolas Maduro as the Opec country's legitimate head of state. Washington and most western countries recognize opposition leader Juan Guaido as Venezuela's interim president in place of Maduro.

The barter deals are aimed at recovering PdV's capacity to produce motor fuel and other refined products that have been in short supply across Venezuela for months. The fuel deficit has been aggravated by US financial and oil sanctions that have cut off US supply of products to Venezuela and US purchases of Venezuelan crude. Before the oil sanctions were imposed in late January, the US had been the largest products supplier to Venezuela and the largest market for the country's heavy crude. Almost all of Venezuelan crude exports are now going to China and India.

Current gasoline production of roughly 40,000 b/d at the CRP is supplemented by Russian suppliers providing about 25,000 b/d of finished gasoline imports, two oil union officials told Argus.

Venezuela has nameplate capacity to produce around 250,000 b/d of gasoline.

Sulzer will repair crude distillation units and industrial services infrastructure including electricity, water and steam.

Wison will repair fluidized catalytic crackers, a flexicoker at Amuay, hydrodesulfurization units, distillation towers and other equipment.

Sulzer and Wison also will repair the 140,000 b/d El Palito refinery in Carabobo state, which has been shut down since 2017, to restart its catalytic cracker, distillation units and industrial services infrastructure.

Wison, which already has a upgrade contract for the 190,000 b/d Puerto La Cruz refinery with Korean firm Hyundai Engineering since 2013, has also agreed to accelerate efforts to complete the long-delayed expansion which now costs over $8bn, the ministry and palace officials said.