PdV looks to Iran for fuel as refinery repairs falter

US-sanctioned Venezuela is casting a wider net for desperately needed fuel as its Iranian and Chinese-supported efforts to repair its main refineries falter.

According to shipping data, at least five product tankers that loaded in Iran are currently steaming west out of the Mediterranean and are believed to be headed for Venezuela.

The Iranian supply, which was confirmed by Venezuela's oil ministry, would buy Caracas further time to fix its refining system crippled by years of neglect. Over the past year, state-owned PdV has brought in gasoline and diesel from Europe and India. Before the US imposed oil sanctions in January 2019, the US was Venezuela's largest source of fuel supply.

Armed with some parts from China and catalyst from Iran, PdV is aiming to restart its 940,000 b/d CRP refining complex in six to eight weeks.

Senior union officials and managers at the facility warn that mostly unqualified workers tasked with repairing core processing units are risking their lives to meet an impossible deadline.

PdV's current plan is to resume gasoline production at the CRP's 305,000 b/d Cardon refinery's 86,000 b/d fluid catalytic cracker (FCC) and its 54,000 b/d naphtha reformer and another 108,000 b/d FCC at the associated 640,000 b/d Amuay refinery no later than 15 July, a senior manager at the complex said.

Union leader Ivan Freites tells Argus that "under optimum conditions it would take at least six months" to restore the CRP's essential industrial services and safely repair key units, including the two FCCs with a combined capacity of 194,000 b/d.

The goal of restarting gasoline production "between 30 June and 15 July at the latest" assumes that complex processing units can be repaired by workers with scant experience operating units which have been out of service for up to eight years, Freites said. Deficient supply of water, steam and electricity is a persistent bottleneck.

Two distillation towers with total capacity of 120,000 b/d at Cardon and Amuay are producing some diesel, but operations are sporadic at best. What little is produced is allocated to thermal power stations, shipped to Venezuela's close ally Cuba or smuggled into the black market.

In one instance last week, the two towers had to be shut down because of a lack of crude supply from PdV's western division.

"The trickle of diesel reaching service stations in Venezuela from the CRP is controlled by the military," a PdV domestic marketing official in Caracas confirmed. "Distributors of food and medicine are not getting diesel unless they pay cash in US dollars to the uniformed personnel manning the service stations."

A handful of Iranian technicians flown in to evaluate the CRP complex have been unhelpful because they are not familiar with the US proprietary technologies in use at Cardon and Amuay.

Catalyst and blendstock used to manufacture gasoline have been imported via Mahan Air since April, but the repair crews are Venezuelan.

"The Cubans looked at the refineries and went home, then the Chinese visited the CRP over a year ago and also went home, and now the Iranians have looked things over and also returned home," a senior CRP manager said.

Cooperation between Iran and Venezuela has raised alarm bells in Washington, but it has few available tools to block it. The oil sectors and shipping in both countries already are subject to stringent US sanctions. Mahan Air is on the US sanctions list as well. US secretary of state Mike Pompeo earlier this month called on other countries to deny overflight rights for Mahan Air shipments to Venezuela. But even some US allies continue to accept the Iranian carrier's passenger flights, despite years of warnings from Washington.