Venezuela struggles with refinery blaze after deadly blast

PARAGUANA, Venezuela Sun Aug 26, 2012 6:10pm EDT

1 of 2. A column of smoke rises, a day after an explosion at Amuay oil refinery in Punto Fijo in the Peninsula of Paraguana August 26, 2012.

Credit: Reuters/Gil Montano

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PARAGUANA, Venezuela (Reuters) - Venezuelan firefighters struggled on Sunday to put out a blaze at the country's biggest refinery sparked by an explosion that killed 41 people in one of the global oil industry's deadliest accidents.

Officials at the 645,000 barrel-per-day Amuay refinery are trying to stop the fire still raging at two storage tanks from spreading to other nearby fuel storage facilities. That would delay Amuay's restart beyond the current estimate of two days.

But the incident is likely to have little impact on world fuel prices because the OPEC nation can use its existing stocks to supply its domestic market and maintain exports.

On Sunday, the skeletal remains of a National Guard barracks destroyed in the blast sagged amid broken concrete and rubble, to a backdrop of flames and huge plumes of smoke coming from the two burning tanks.

Officials said a gas leak caused the explosion and that more than 200 homes were damaged by the shockwave. Some were located just across the street from the refinery, which is on a peninsula in the Caribbean Sea in western Venezuela.

Puddles of petroleum mixed with water covered roads in the area. The victims from Saturday included 18 National Guard troops and 15 civilians; six remain unidentified. On Sunday, two of the dozens of people wounded died in hospital, a National Guard general told reporters.

President Hugo Chavez, who visited the scene on Sunday, said there were still several people unaccounted for, as well as at least 35 people still in hospital, so the death toll could rise.

Ramon Diaz, 32, who lives in the nearby slum of Ali Primera, told Reuters the blast blew off the roof of his house.

"The fence was pulled up. The windows came out and broke on top of the kids' beds. It was horrible," he said. "We are still scared. We look at those flames and we're still scared."

State TV broadcast footage of flames hovering close to spherical storage units that hold liquefied natural gas. They were not among the nine storage tanks affected by Saturday's blaze.

State oil company PDVSA said it will focus on extinguishing one of the two burning tanks by spraying it with foam. If they cannot put it out on Sunday, they will wait for the fire to burn out on its own - which could take two to three days.

Ramirez told Reuters that PDVSA was considering seeking floating storage in the area -- using tankers to store oil and fuel offshore while the company repairs the main tanks.

AMONG THE DEADLIEST

The incident follows a decade of repeated outages and accidents at PDVSA installations that have prompted allegations of mismanagement by Chavez's government.

In extensive remarks to reporters during his visit to Amuay, Chavez refuted suggestions that negligence had caused the blast.

"Lack of maintenance? Who could possibly say this? Only someone who is irresponsible," the president said.

He spent nearly ten minutes chiding a reporter for repeating comments by nearby residents who had said that the smell of gas was in the air the day before the explosion.

The blast ranks as one of the deadliest oil industry accidents in recent history, approaching the toll of the 1997 fire at Hindustan Petroleum's Visakhapatnam refinery in India that killed 56, and topping the 2005 BP Texas City refinery blast that killed 15 workers.

Amuay had already partially shut operations at least twice this year due to a small fire and the failure of a cooling unit.

The high death toll was in part due to the location of the National Guard outpost, which had not been moved when the refinery shifted the site of the storage tank area next to where troops were stationed. Ramirez acknowledged to Reuters that the facility was too close to the refinery.

Amuay, together with a neighboring facility, forms part of the Paraguana Refining Center, the second-biggest refinery complex in the world, with an overall capacity of 955,000 bpd. Only India's Jamnagar complex is bigger, at 1.24 million bpd.

Many of Venezuela's oil installations have slums next to them, and sometimes they are located in the middle of cities. In some places, families hang clothes out to dry on fences that surround small oil derricks.

Venezuela has traditionally been a key supplier of fuel to the United States, but U.S. reliance on it has declined sharply over the last five years due in part to repeated unplanned outages at Venezuelan refineries.

In the first five months of 2012, the United States imported just over 50,000 bpd of fuel from Venezuela, down from nearly 290,000 bpd in 2005, according to data from the U.S. Energy Information Administration. Venezuela still ranks among the top five suppliers of crude oil to the United States.

(Additional reporting by Matthew Robinson in New York; Writing by Brian Ellsworth, Editing by Daniel Wallis, Cynthia Osterman and Philip Barbara)

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