Phillips, Pdvsa ink coker, crude sale deal

A unit of Petroleos de Venezuela SA (Pdvsa) and Phillips Petroleum Co. have signed a $500 million deal to build a coking unit at Phillips's refining complex at Sweeney, Tex.

Under the principles of agreement, signed late last month, Corpoven also agreed to supply about 165,000 b/d of heavy crude to Phillips for processing at Sweeney.

About 80% of the construction cost for the new coker unit would be raised through project financing, while Pdvsa unit Corpoven SA and Phillips will put up the remaining 20%. The two companies each will hold a 50% stake in the coker unit.

"The agreement demonstrates our company's commitment to underline the profitability of our refinery, marketing, and transport operations," said Phillips Chairman and CEO Wayne Allen. "With this project, the Sweeney complex will have a capacity to process more heavy crudes and convert them into products with a high commercial value."

Corpoven Pres. Guillermo Archila said the project supports Venezuela's strategy to increase its production of heavy crudes and guarantee the placement of products derived from them.

Projects such as this reaffirm Pdvsa's will to continue being a secure and reliable oil supplier to the U.S. market into the next century, said Archila.

What's involved

The coker unit will thermally crack heavy ends and convert them into industrial coke. The remaining liquids will be sent to other units at the refinery, where they will be upgraded into middle distillates and lighter products.

Corpoven said the construction cost of the coker unit, which will have a processing capacity for 58,000 b/d, is estimated at $500 million. Construction is scheduled to begin in 1998 and be completed in 2000. The project is subject to a final negotiation and approval by the boards of Corpoven, Pdvsa, and Phillips.

The Sweeney refining complex, about 65 miles southwest of Houston, is Phillips's largest operating plant.

The complex includes a refinery, natural gas liquids processing center, and petrochemical plants. The refinery has a crude processing capacity of about 200,000 b/d.

The Corpoven-Phillips agreement extends for 20 years, with an option for renewal.

Phillips already has a 20% stake in a recently signed $3.5 billion strategic association involving Corpoven, ARCO, and Texaco Inc. to produce, upgrade, and market 200,000 b/d of extra-heavy crude from the Hamaca area of the Orinoco oil belt in eastern Venezuela.

Phillips, which currently purchases about 30,000 b/d of mostly Venezuelan light crude, also is involved in several other upstream projects in Venezuela.