State firms from Iran and Venezuela will start in the coming weeks a 100-day revamp of the South American nation's largest refining complex to restore its crude distillation capacity, said Hydrocarbonprocessing.
The effort by state oil firm Petroleos de Venezuela (PDVSA) and the state-owned National Iranian Oil Refining and Distribution Company (NIORDC) to boost fuel output at the Paraguana Refining Center marks a step toward ending Venezuela's reliance on U.S. refinery technology, the sources said.
Venezuela, which has the world's largest crude reserves, has struggled in recent years to produce enough gasoline and diesel due to refinery outages, a lack of investment and U.S. sanctions that create obstacles for imports. Long lines at gasoline stations have been common since 2020.
Tehran has strengthened ties with Caracas in recent years, providing crude and condensate as well as parts and feedstock for Venezuela's aging 1.3 million barrel per day oil (bpd) refining network. A unit of NIORDC signed a 110-MM euro contract with PDVSA in May to repair Venezuela's smallest refinery, the 146,000-bpd El Palito in the center of the country, a project that is currently underway.
The companies are now expected to sign in the coming weeks a 460-million-euro contract to revamp the 955,000-bpd Paraguana refinery complex on the coast of western Venezuela, according to the sources. Iran's Foreign Minister Hossein Amirabdollahian arrived in Caracas on Friday and met Venezuela's oil minister Tareck El Aissami, according to tweets from the Iranian embassy in Caracas and Venezuela's oil ministry.
The embassy did not answer calls seeking comment on their talks. PDVSA, NIORDC and Venezuela's oil ministry did not reply to requests for comment. The Paraguana revamp project will allow NIORDC to hire contractors and outsource work to repair five of the complex's nine distillation units, which do the primary refining of crude oil, the four people said.
Paraguana - composed of the Amuay and Cardon refineries - operated at 25% of capacity this month even after the restart of Amuay's catalytic cracker, a key unit for gasoline. Iran will be in charge of parts procurement, installation and inspection before handling the refinery's operations back to PDVSA, two of the people said.
The planned distillation unit overhaul will combine Chinese and Iranian parts and equipment in refineries originally built with U.S. technology, the sources said. The integration of the new and old components will not be easy, they added.
If the revamp succeeds, a larger overhaul could follow in 2024 and 2025, according to the sources. "If the distillation plants do not work, the refinery does not work," said Caracas-based energy expert Nelson Hernandez. "The whole facilities need to pass through a revamp or a major maintenance program."
We remind, Venezuela's oil exports last year declined due to infrastructure outages, U.S. sanctions and rising competition in its key Asia market despite assistance from ally Iran, according to shipping data and documents. Exports this year are expected to get a lift after the United States relaxed oil sanctions by authorizing some partners of state-run firm Petroleos de Venezuela (PDVSA) to resume taking Venezuelan crude.
mrchub.com