PDVSA’s Refining System Continues to Deteriorate

Venezuela’s oil company PDVSA expects its refining network to work at 44 % of capacity throughout August due to a lack of light crude and spare parts and planned maintenance work, according to an internal report from the state-run firm seen by Reuters on August 1.

PDVSA refineries continue to run below 50% capacity.

 PDVSA’s refineries in Venezuela and the neighboring island of Curacao, which can theoretically process up to 1.64 million barrels per day (bpd) of crude, last month worked at 45 % of capacity due to similar issues, minimizing the company’s refined product exports and increasing the need for imported products.

 The expected decline in August will come from lower processing rates at Puerto la Cruz, Amuay and Cardon refineries, which currently have seven out of 12 crude distillation units out of service due to lack of specific crude segregations and extended maintenance work. Cardon’s distillation unit No. 2 could restart in mid-September after planned maintenance work, according to the report seen by Reuters.

 Venezuela’s oil output has consistently declined since 2012, affecting exports and availability for domestic refineries, particularly hitting the 187,000 bpd Puerto la Cruz refinery, which is expected to operate at 32 % of capacity this month. Earlier in May, several key operational units such as Puerto la Cruz’s refinery’s fluid catalytic cracker and the Cardon refinery’s hydrotreating, hydrodesulfurization and lubricants units became inactive, according to data and worker comments. But in mid-August, PDVSA is planning to restart a crude distillation unit at its 335,000 bpd Isla refinery on Curacao, partially compensating for lower processing rates at other facilities.

The Isla refinery uses PDVSA’s crude as well as imported oil, mostly from the United States. Payment delays have this year affected several deliveries as most suppliers ask to be prepaid before authorizing tankers to discharge their cargoes. Lower crude processing at its refineries would allow PDVSA to export slightly more crude in August. It plans external sales of 1.37 million bpd this month versus 1.36 million bpd in July. However, the increase will not be enough to significantly reduce the number of pending oil cargoes to pay for loans extended to PDVSA and the Venezuelan government in recent years, the document says.