Venezuela rushes for fuel imports as biggest refinery ails
Mon Nov 10, 2014 11:00pm GMT
* State-run oil company is seeking 8 cargoes of gasoline, ULSD
* Amuay and Cardon operations affected by power problems
* European diesel margins reach new high amidst strong demand (Adds market reaction, context)
By Sailu Urribarri and Marianna Parraga
PARAGUANA, Venezuela/HOUSTON, Nov 10 (Reuters) -
Venezuela is rushing to import up to 2.4 million barrels of diesel and gasoline after power outages hit its main refining complex, an unusual buying spree that has boosted U.S. and European fuel prices and threatens to worsen the OPEC member's financial woes.
State-run oil company PDVSA has told traders since Friday that it wants to buy up to two 300,000-barrel cargoes of ultra low-sulfur diesel (ULSD) plus another six 300,000-barrel cargoes of gasoline, a fuel it rarely buys overseas, for delivery in a week's time, traders told Reuters on Monday.
The sudden demand follows major disruptions to Venezuela's nearly 1 million barrel per day (bpd) Paraguana refining complex, which remained partly out of action on Monday, according to workers.
The larger part of the complex, the 645,000 bpd Amuay plant, was halted last week following a blackout, while a storm affected adjacent 310,000 bpd Cardon plant during the weekend.
Power has since been restored and officials are in the early stages of bringing the units back online to have them running by Thursday.
Workers added Amuay operations were back to 55 percent of capacity on Monday, while Cardon remained fully shut.
"We have had power problems in the past (at Cardon), but the whole steam system was affected this time and the refinery was completely paralyzed," a worker said.
The fuel purchases, which were not made via formal tenders, would be the largest by Venezuela since an accident hit its largest refinery, Amuay, in 2012. They come at a delicate moment for PDVSA, which has already come under criticism for importing crude oil for the first time, and faces declining revenues due to a 30 percent slump in global oil prices.
REFINERY WOES
With much of its 1.3 million bpd domestic refining capacity out of order, PDVSA is asking several trading firms to submit offers for up to three gasoline RON 95 cargoes, three gasoline RON 91 cargoes and two ULSD cargoes.
Tankers must be at sea in order to be delivered by a Nov. 17 deadline, traders said. They must unload at any of PDVSA's terminals, especially at the Carenero and El Palito ports that serve Venezuela's domestic market.
The company told traders the ULSD cargoes can be also delivered to the Isla refinery, operated by PDVSA, in Curacao.
Isla also had problems last week due to a gas leak and a fire. PDVSA said operations were not affected, but the facility has been working at half capacity in recent years because of power and steam problems.
PDVSA's smallest refineries, El Palito and Puerto la Cruz, have not fully restarted after planned maintenance work was extended, affecting the deep conversion units that produce light fuels such as gasoline and diesel.
SHORT TIMEFRAME
Gathering eight cargoes of finished fuels may be difficult given the short timeframe PDVSA is looking for and its well-known cashflow problems, the traders added.
If PDVSA finally receives all the cargoes, it would have to pay some $280 million in the coming 35 days, traders estimated, at a time when the state-run oil company faces debt maturities, a declining price for its oil exports while increasing crude imports.
The company in October had tendered to buy up to six 300,000 barrel cargoes of ULSD, reformate and catalytic naphtha. Those cargoes must be delivered and paid in November as well.
In August 2012, PDVSA gathered a fuel armada to supply its domestic market and meet its exports obligations after a severe explosion hit Amuay, leaving over 40 people dead. The purchases, which lasted during the following year, affected its net income.
Strong demand in Latin America and the United States plus refinery woes in Europe are boosting European diesel refinery margins, which reached a 21-month high on Monday.
PDVSA last week said Amuay's restart process would take some six days and in a weekend communique it said there had been no impact to "core" processes at Cardon after the storm.
But workers offered a different picture.
"Right now, Cardon is like Amuay was straight after the problem there. Productive activities are zero," said one worker, who asked not to be named, adding the refinery's steam system had collapsed. A restart would take two days, he said.
Three of five crude distillation units at Amuay were back in operation, workers said, meaning crude processing was increasing, though the refinery still needs to restart its deep conversion units in order to produce finished fuels.
PDVSA union leader Ivan Freites said both refineries should be fully operating by the end of the week.
PDVSA said it had enough fuel inventories to cover domestic and international demand, but it did not elaborate.
Requests to PDVSA for comments on the imports went unanswered.
(Additional reporting by Libby George in London, Andrew Cawthorne in Caracas; Editing by
Bernard Orr and Marguerita Choy)
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