Venezuelan state-owned PdV's failed effort to restart its 140,000 b/d El Palito refinery is aggravating a fuel deficit that is sparking sporadic protests by frustrated drivers even as the Covid-19 pandemic starts to spread.
On top of escalating US sanctions, PdV's loss of nearly all its 1.3mn b/d of domestic refining capacity has grounded much of the country since March.
In recent days, PdV restarted a crude distillation unit at El Palito, where it is processing around 80,000 b/d of light and medium crude into off-spec gasoil. But efforts to restore a 61,500 b/d fluid catalytic cracker have fallen flat, partly because of damages caused by past fires that led to the refinery's 2017 shutdown, according to more than a dozen current and former PdV workers and oil union officials consulted by Argus.
New blazes erupted in a lagoon and products pipeline near El Palito over the past three days, adding to a widespread perception of disarray at the complex.
PdV is "just starting the preheating stage" of the processing units and interconnected pipelines required to sustain distillation operations, El Palito's former oil union director Diezbalo Espinoza said. "All units and pipeline systems need to be thoroughly cleaned, which takes at least a month."
National oil union director Ivan Freites disputed PdV assertions that the FCC is producing 35,000 b/d of 91-octane gasoline. The unit requires extensive repairs and cannot be restarted safely for at least six weeks, Freites and Espinoza said.
Venezuela's gasoline production requires imported blendstock such as MTBE, as well as fresh water which PdV is now shipping to El Palito from eastern Venezuela. Before the US imposed oil sanctions in January 2019, Venezuela routinely imported gasoline and gasoline components from US refiners.
Mexican connection
At least one cargo carrying up to 325,000 bl gasoline and components is heading to Venezuela aboard the Bahamas-flagged medium-range tanker Diadema, which loaded in Milazzo on 5 April, according to shipping data. The vessel is due to arrive in Puerto La Cruz on 22 April.
But PdV needs steady supply to ensure food and medical aid distribution, at a minimum. PdV is currently in talks with products suppliers in Asia and Turkey after the US sanctioned Russian state-controlled Rosneft's two trading arms in February and March, a PdV international marketing and supply official in Caracas said.
In the latest sign of a Mexican connection to Venezuelan oil trade, PdV signed a contract on 17 March to swap crude for premium gasoline with Guadalajara, Mexico-based Grupo Jomadi Logistics and Cargo, according to four Venezuelan oil and government officials with direct knowledge of the transaction.
Under the contract, PdV will swap 5mn bl of Venezuelan crude for an unspecified volume of 95-octane gasoline "to be determined by both companies at a future date," a member of a PdV restructuring commission told Argus.
The deal stipulates that Venezuelan crude will be loaded at PdV terminals with Jomadi taking delivery of the crude at Turkish ports between 25 March and 25 July. Necessary tanker fixtures are Jomadi's responsibility, the commission official said. It is not clear if any of the loadings have already taken place.
In recent months, PdV has been swapping some crude for food from two other Mexico-based firms, Libre a Bordo and Schlager, which are believed to be channeling the supply into China.
