May 7, 2020 / 8:25 PM / a month ago

Venezuela power outages, price plunge deal setbacks to PDVSA crude upgraders

(Reuters) - Power outages in Venezuela and a plunge in oil prices have dealt setbacks to state oil company Petroleos de Venezuela’s plans to produce more upgraded crude, according to a document seen by Reuters and three people close to the company.

FILE PHOTO: Oilfield workers hold a flag with the corporate logo of Venezuela's state oil company PDVSA, in a drilling rig at an oil well operated by them, in the oil rich Orinoco belt, April 16, 2015. REUTERS/Carlos Garcia Rawlins

Extra-heavy crude from Venezuela’s largest oil field, the Orinoco oil belt, must be either upgraded or blended with lighter crudes before being exported. Those operations take place at four upgraders and one blending facility near the Jose terminal in eastern Venezuela, the country’s main oil port.

Earlier this week, the Petropiar upgrader - part of a joint venture between PDVSA and U.S.-based Chevron Corp - stopped producing upgraded synthetic crude due to a power outage and is operating as a less-complex blending facility, said the people, who spoke on the condition of anonymity.

Petropiar had been acting as a blending facility producing Merey 16 crude, Venezuela’s flagship grade, for much of last year, but PDVSA restarted upgrading operations earlier this year.

In addition, PDVSA has delayed plans to activate the long-halted Petromonagas and Petrocedeno upgraders to serve as blending plants due to the plunge in global oil prices in recent months, a result of a drop in demand due to the coronavirus outbreak, according to an internal PDVSA document seen by Reuters.

Petrocedeno, an joint venture between PDVSA, France’s Total and Norway’s Equinor, had been scheduled to restart in May and Petromonagas was supposed to restart in July. Petromonagas is a joint venture between PDVSA and Russia’s Rosneft, which in March sold its Venezuelan assets to an unnamed Russian state firm.

The setbacks come as Venezuela’s crude output has dropped below 700,000 bpd in recent weeks, down more than 20% from the start of the year, due to intensifying U.S. sanctions and the drop in prices.

Neither PDVSA nor any of its partners responded to requests for comment.

Meanwhile, the Sinovensa blending facility - a joint venture between PDVSA and China National Petroleum Corp - was halted for several days this week, according to the PDVSA document and one person familiar with the matter.

A second source said that the plant has since restarted but at limited levels, processing just 72,000 barrels per day (bpd) of crude.

The outage took place as the Sinovensa project in the Orinoco belt halted output due to fire-related damage to a PDVSA pumping station responsible for transporting its crude.

Reporting by Mircey Guanipa in Maracay, Marianna Parraga in Mexico City and Luc Cohen in New York; Editing by Daniel Wallis

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