Widening blackouts stifle Venezuela oil production

Frequent blackouts are thwarting Venezuelan state-owned PdV's plans to revive oil production that is now hurtling toward 1mn b/d by year´s end.

On paper, state-owned utility Corpoelec has 36.3GW of thermal and hydro generation capacity nationwide, but only 12.5GW was operational in the first half of October, according to an internal electricity ministry report obtained by Argus.

The 15 October report indicates that almost two-thirds of Corpoelec's installed generation capacity was out of service because of damaged equipment and chronic shortages of natural gas and diesel feedstock.

Officially, the energy ministry and PdV routinely maintain that oil operations are unaffected by the daily power outages that are affecting all corners of the Opec country.

A ministry official said privately that "more frequent and longer-lasting blackouts are hurting PdV's operations and delaying plans to raise production by up to 1mn b/d, because we can't produce more oil without power."

The problem is especially acute in northwestern Venezuela around Lake Maracaibo.

PdV's upstream and downstream operations in the western division, which includes the 940,000 b/d CRP refining complex in Falcon state, are most exposed because they are further from the 10GW Guri dam that supplies most of Venezuela´s power. PdV´s eastern and Orinoco divisions are also impacted. "The chronic absence of reliable power supplies has become a critical problem in all of PdV's core operating areas," a ministry official said.

PdV lost most of its independent power supply in 2010, when late president Hugo Chavez ordered the integration of PdV´s power generation assets, such as the 300MW Genevapca thermal plant near the 940,000 b/d CRP refining complex, with Corpoelec's national grid.

Chavez argued that the move would fortify the grid, reduce outages and distribute power more efficiently. Instead, integration made PdV vulnerable to the structural failings of the whole system, the ministry official said.

In mid-October, the Guri dam, formally known as the Simon Bolivar complex and located on the Lower Caroni river in Bolivar state, was generating only 5.2GW. Nine of 20 turbines were broken and at least three more were at risk of imminent shutdown, the ministry report says.

Corpolec says it has 4GW of installed thermal capacity dedicated to supplying Caracas, but only 880MW of that capacity was operational as of mid-October.

Corpoelec has over 3.2GW of thermal capacity in Carabobo state, including the aged 2.6GW Planta Centro thermal complex on the coast near PdV's 140,000 b/d El Palito refinery. Planta Centro is only generating about 400MW, using fuel oil.

Corpoelec's thermal assets total almost 4GW in the western state of Zulia where PdV wants to boost crude output from less than 300,000 b/d to almost 1mn b/d within three years. Zulia as of 14 October only reported about 600MW of operational thermal capacity, making the oil-rich state almost completely dependent on hydropower transmitted over 780mi from Guri on a poorly maintained 750kV transmission system.

A nearly month-long statewide outage in Zulia in August 2018 was caused by a fire on the 5.4mi General Rafael Urdaneta bridge crossing Lake Maracaibo that destroyed up to a half-mile section of dual 230kV transmission lines attached to the bridge.

Corpoelec has not yet finished repairs because it has not been able to import needed parts, blaming US sanctions for the delay.

As a result, Zulia remains subject to statewide rationing of up to 18 hours a day in some areas.

The ministry report blames over 12 statewide blackouts in Zulia this year on equipment failures in the transmission system, mainly overloaded transformer explosions at Corpoelec's Arenosa substation in Carabobo and the Horqueta substation in nearby Aragua state.

The report identifies the two critical substations as the grid´s "most unstable components".

The substations affect supplies from Guri to Zulia, the Andes region, the country's central region and Caracas, a Corpoelec official said. "If Arenosa and Horqueta are not operating optimally, even minor incidents will destabilize the entire grid, resulting in multi-state blackouts."

Corpoelec's transmission system, which includes seven substations and over 1,367mi of power lines, needs to be completely rebuilt, a project that would include replacing all of the existing 750kV transmission lines and repairing seven substations, the Corpoelec official said.

Corpoelec's 8GW transmission system eventually needs to be expanded to at least 13GW to accommodate incremental hydropower supplies Corpoelec expects after Guri's turbines are repaired and the 2.16GW Manuel Piar (Tocoma) hydro complex below Guri is completed.

Corpoelec engineers conservatively calculate the cost of repairing Guri's turbines, completing Tocoma and upgrading the transmission system in a period of five years at more than $10bn.