Chinese and Russian state oil companies PetroChina and Rosneft will not pay the costs of repairing and modernizing Venezuela’s Cardón and Amuay refineries for PDVSA, according to union sources.
Ivan Freites, senior official of the Venezuelan Unions Federation of Oil Workers, told local newspaper El Nacional the foreign partners decided after lengthy negotiations with PDVSA the projected $10 billion cost was too high.
Under proposed lease agreements, the firms would solely cover the costs of upgrading both refineries and use each for 10 years. After that period, the refineries, still owned by the Venezuela government, would be returned to PDVSA, Kallanish Energy learns.
“That agreement did not prosper because these refineries are in a deplorable state and they realized that the investments they had to make are extremely high,” said Freites.
Rosneft would manage the Amuay refinery — which has the capacity to process roughly 640,000 barrels per day (BPD) of crude — and PetroChina would take over the Cardón refinery – which can process 305,000 BPD.
Located in Falcón state, they are both part of the Paraguaná refining complex, which has a capacity of roughly 940,000 BPD, including the Bajo Grande refinery.
Freites said that without foreign investment, Venezuela is likely to shut three of its major refineries in coming weeks, as a shortage of crude and lack of personnel will add further pressure and prevent the facilities from operating.
The refineries pending “indefinite closure” are Cardon, El Palito (140,000 BPD) and Puerto La Cruz (190,000 BPD), the union leader said. Together, they account for nearly half of PDVSA’s 1.3 MMBPD of domestic refining capacity.
Currently, only four refineries are said to be operating in Venezuela, at roughly 30% of their combined nominal capacity – reportedly at about 390,000 BPD.
None of the companies responded to request for comments.
