PdV eking out refinery fix, fuel pricing plan

Venezuela's state-owned PdV is making some headway in refinery repairs as the government hammers out a formal mechanism to sell newly arrived Iranian gasoline at market prices.

The Faxon, the fourth of five Iranian-flagged tankers carrying 1.5mn bl of gasoline and the blendstock alkylate was arriving in Venezuelan waters today. Since last weekend, the Fortune and Petunia have berthed at El Palito and the Forest at Cardon. Coming up the rear is the Clavel.

PdV is hoping the imports will buy time to fix part of its 1.3mn b/d refining system, and replenish nearly exhausted domestic fuel stocks. The uphill repair effort is currently focused on the 305,000 b/d Cardon refinery, where Iran and China have pitched in with catalyst and spare parts flown in by Iran's Mahan Air. Despite some progress, PdV seems unlikely to be churning out its own gasoline before the Iranian supply runs out in a few weeks.

After restarting Cardon's atmospheric and vacuum distillation units, a gas unit and a 70,000 b/d coker, PdV hopes to restore a 25,000 b/d alkylation unit and an 86,000 b/d fluid catalytic cracker (FCC) by mid-July. Both units have been down since the end of 2018, two Cardon workers said.

A PdV downstream official in Caracas said that after gasoline production resumes at Cardon, focus will return to the repair of the 140,000 b/d El Palito refinery's 61,500 b/d FCC which has been down since 2017.

Venezuela in theory could make the Iranian gasoline last longer by raising pump prices, which have long been close to zero. But months of acute scarcity, aggravated by diversions to Cuba and smugglers, have already led to informal retail pricing of $2-$3/liter.

Now the US-sanctioned government of President Nicolas Maduro is seeking to formalize the higher prices, the latest official attempt to introduce market pricing.

In a national broadcast late yesterday, Maduro said the Iranian gasoline will be sold at international prices at up to 100 retail stations under military control.

"We paid in dollars for the gasoline we brought, and that gasoline must be paid for," Maduro said.

"I'm directing a team of specialists to determine the amount that will be charged for the gasoline, which will be within the plan to normalize and regulate supply."

Fuel rationing measures will remain in effect with priority given to food distribution, health care professionals and services, and security forces, an oil ministry official told Argus.