Merger Of Venezuelan Refineries Delayed

The merging of Venezuela's two largest refineries, Amuay and Cardon-the first step in plans by state oil company Petroleos de Venezuela SA (Pdvsa) to drastically restructure its operations, has been delayed to the end of August, industry sources have disclosed.

The refinery merger originally was scheduled to be in place at the beginning of the month, but the sources said it now has been rescheduled.

Last month, Pdvsa Pres. Luis Giusti unveiled his company's ambitious restructuring plan that calls for the replacement of the current structure of vertically integrated subsidiaries with three business units to handle upstream and downstream operations (OGJ, July 28, 1997, p. 40).

Plans call for new core business units PDV Exploration & Production, PDV Manufacturing & Trade, and PDV Services to replace the corporation's vertically integrated subsidiaries Lagoven, Maraven, and Corpoven by sometime early in 1998.

Refineries' merger

The first phase of that restructuring program is the merger of the Lagoven-operated Amuay refinery and Lag- oven-operated Cardon refinery and placing them under the administrative wing of PDV Manufacturing & Trade.

Rescheduling the linkup of the two refineries in northwestern Venezuela apparently was due to last minute difficulties in appointing the single authority that would be responsible for managing the refining complex.

"The final decision (on the authority) will be taken by Pdvsa's board of directors in the next few days," the source said last week, explaining that both refineries would be run by a general manager based on the Paraguana Peninsula, where Amuay is located, and who will report to the board of directors at PDV Manufacturing & Trade.

Integration of Amuay and Cardon refineries, which have a combined processing capacity of about 940,000 b/d, will generate about $150 million in savings for Pdvsa-as well as create the world's biggest refinery.

Problems

The organizational changeover of Pdvsa's refining system is taking place at a time when some of its refineries have been facing some operational difficulties.

Earlier this month, Maraven called force majeure on all its August gasoline exports after a series of accidents at its Cardon and Curacao-based Isla and Cardon refineries, affecting an estimated 1.8 million bbl of high-octane gasoline. The force majeure affected about nine cargoes, but company sources said the bulk of Maraven's commitments had been covered by mid-month.

However, industry observers say that Maraven's problems are likely to continue through the end of August, although it has managed to cover its immediate commitments by buying high-octane gasoline on the international spot market.

Although the problem at one of Cardon's 60,000 b/d crude units was minor, having resulted from a buildup of dust in part of the unit, problems at Isla-Curacao are more serious.

A July 31 fire at a 180,000 b/d crude unit at the Isla refinery cut normal throughput by more than half and sent Maraven scrambling to keep the refinery supplied with naphtha and other feedstock. The damaged crude unit at Isla will not return to even partial operations until the end of August. Meanwhile, the refinery is limping along at around 100,000-200,000 b/d below capacity and 125,000 b/d below normal throughput, by running crude through a second crude unit and a converted thermal cracker.

Maraven expects that, by the end of August, the damaged unit will run at about 115,000 b/d, and the cracker and lube units will return to normal operations. This will mean total crude throughput of about 170,000 b/d. Full repair of the number three crude unit will take about 2-3 months, as serious damage occurred to the vacuum distillation tower.

Pdvsa is supplying feedstocks to Isla from Lagoven's Amuay refinery and Corpoven's Puerto La Cruz refinery to take the pressure off Maraven.

The Isla refinery, is operated by Pdvsa through a 20-year lease. The plant normally produces about 230,000 b/d of refined products, including gasoline, kerosine, diesel, jet fuel, and asphalt. The July 31 fire damaged the refinery's atmospheric distillation tower and a vacuum tower.