Politically volatile Venezuela is refocusing on long-neglected thermal power plants following multiple nationwide blackouts in March.
Most of the country's power supply comes from the 10GW Guri hydroelectric dam on the Caroni River in Bolivar state. But the breakdown of a strategic transmission line from Guri to the rest of Venezuela has shifted attention onto thermal plants that are critical to restoring oil production.
State-owned utility Corpoelec's installed generation capacity, on paper, totals 34GW, of which 19GW are thermoelectric units and 15GW are hydroelectric units, according to the electricity ministry. But without feedstock, maintenance and spare parts, most of Venezuela, including the oil sector, remains without steady power supply.
One large-scale thermal plant targeted for refurbishment is the 1.4GW General Rafael Urdaneta thermoelectric complex, known as Termozulia. Located 15mi south of the western oil city of Maracaibo, Termozulia accounts for about 56pc of Zulia state's 2.5GW of thermal capacity. The complex is currently generating around 400MW or 28.5pc of the total design capacity of its 17 combined-cycle turbines, according to an official with state-owned utility Corpoelec.
Termozulia, which was built in four stages in 2005-18 mainly by Argentinian and Venezuelan contractors Consorcio EIS, Inemelca and Inelectra, remains unfinished and has never generated more than half of its capacity.
An April 2019 Corpoelec report highlights three bottlenecks at Termozulia: a shortage of natural gas or back-up diesel, turbines damaged by a lack of maintenance, and unfinished installations blamed on Corpoelec´s inability to pay debts to contractors and equipment suppliers. More recently, US sanctions against Venezuela's government have also blocked access to imported parts.
"Corpoelec traditionally has sourced its thermoelectric turbines from GE and Siemens, but these companies won't sell to us because of the US sanctions and the unpaid debts," the Corpoelec official told Argus.
Igor Gavidia, the veteran hydroelectric engineer who was named electricity minister and Corpoelec chief executive on 1 April, replacing National Guard general Luis Motta in both posts, has instructed Termozulia's operators to start using domestic gas as feedstock instead of the mostly imported low-sulfur distillates that state-owned oil company PdV has been supplying.
But PdV is unable to supply the gas to Termozulia because of unfinished gas pipelines and a steep decline in its gas production, an oil ministry official said. And with its refineries barely operating and imports impeded by a cash flow and credit squeeze and US sanctions, PdV is short of diesel as well.
"Corpoelec needs at least $150mn which it doesn't have and cannot obtain from the central government or foreign lenders to raise Termozulia to about 80pc of its installed capacity," the Corpoelec official said.
For PdV, the recovery of Termozulia is also critical to recuperating its crude production from legacy fields in its western division in and around Lake Maracaibo, where output is running around 200,000 b/d after falling to half that in March because of the blackouts. Back in the 1990s, the western division produced at least 1mn b/d.
PdV's upstream operations, particularly in Zulia, depend heavily on Corpoelec because nationally less than 800MW of its nearly 2.9GW of dedicated thermal generation assets are operational.
The company says it is currently installing 20 diesel generators with a combined capacity of 50MW in Zulia state at its 41,000 b/d Petroboscan heavy crude joint venture with Chevron. The 2.5MW turbo units will be installed at Zulia substation 9 in Jesus Enrique Lossada municipality with the goal of assuring an independent, autonomous supply for Petroboscan's operations in the Boscan field.
The "small and inefficient" generators may be among hundreds that were imported at inflated prices from Cuba a decade ago and no longer work, critics inside Corpoelec and PdV tell Argus.
PdV said it is also installing a 32MW thermoelectric unit in Cabimas municipality on the east coast of Lake Maracaibo to stabilize supply to upstream operations.
Oil industry crews are trying to repair and recommission PdV´s dedicated assets, which are key to reviving crude production currently averaging about 800,000 b/d.
Getting thermal units back in shape will require PdV to boost gas production. The company produced less than 5.5bn cf/d in March compared with a 2016 peak of 7.9bn cf/d, according to internal oil ministry figures.
About 2bn cf/d of the March gas was flared, including over 1.2bn cf/d in the eastern state of Monagas. Another 1.4bn cf/d was re-injected to boost crude production, leaving about 2.1bn cf/d for other market segments, including electricity generation, petrochemicals, steelmaking and non-oil manufacturing and residential consumption.
Over 87pc of the gas produced in Venezuela is associated with oil production. Offshore, Spain´s Repsol and Italy´s Eni are producing 300mn-500mn cf/d of dry gas from the Perla field, with the level varying depending on demand, according to Repsol.
