Maduro gets oil lifeline from Russia after U.S. sanctions hit

[MRubio]

HOUSTON and CARACAS (Bloomberg) -- Just as Venezuelan state-run oil company PDVSA was running out of an obscure product needed to thin out its crude and keep exports flowing in the wake of U.S. sanctions, Russia is coming to the rescue.

Rosneft Oil Co. PJSC, the Moscow-based company controlled by Vladimir Putin’s government, is sending the first cargoes of heavy naphtha to Venezuela since the U.S. imposed harsher sanctions on PDVSA at the end of January, according to shipping reports and a person with knowledge of the situation. The compound is used to thin the sludgy Venezuelan crude so it can move through pipelines to the coast. Without it, crude gets stuck in the fields, unable to be upgraded into refinery-ready oil.

Two Rosneft tankers, Serengeti and Abliani, will deliver a combined 1 MMbbl of heavy naphtha from Europe to Venezuela in coming weeks, ending a month-long gap of supply. The volumes will bring relief but are far from solving the problem. Before the new sanctions were imposed in January, Venezuela was importing between 2 MMbbl and 3 MMbbl of heavy naphtha every month.

The Rosneft cargoes will replace imports from the U.S., which used to be the top supplier of the diluent. In 2018, all of Venezuela’s imports were from the U.S. Gulf Coast via trading houses including Reliance Industries Ltd., Citgo Petroleum Corp.’s LDC Supply Trading, Vitol Group and Trafigura Ltd.

https://www.worldoil.com/news/2019/3/5/maduro-gets-oil-lifeline-from-russia-after-us-sanctions-hit

[Ghost Dog]

1. Could Venezuela be producing its own naptha for this purpose

at the Paraguaná Refinery Complex, were investment to be so directed? Or, are there technical reasons why not?

The Paraguaná Refinery Complex (Spanish: Centro de Refinación de Paraguaná) is a crude oil refinery complex in Venezuela. It is considered the world's third largest refinery complex, just after Jamnagar Refinery (India) and Ulsan Refinery [fr] (South Korea). The Paraguaná Refinery Complex was created by the fusion of Amuay Refinery, Bajo Grande Refinery and Cardón Refinery. The Paraguana Refinery Complex is still the largest refinery in the Western Hemisphere.[1] As of 2012, it refined 955 thousand barrels per day (151,800 m3/d).[2] The complex is located in the Paraguaná Peninsula in Falcón state (Amuay and Cardón refineries) and the western coast of Lake Maracaibo in the Zulia state (Bajo Grande Refinery).[3] The complex accounts for 71% of the refining capacity of Venezuela and it belongs to the state-owned company Petróleos de Venezuela (PDVSA).[4]

https://en.wikipedia.org/wiki/Paraguan%C3%A1_Refinery_Complex

Petroleum naphtha is an intermediate hydrocarbon liquid stream derived from the refining of crude oil[1][2][3] with CAS-no 64742-48-9.[4] It is most usually desulfurized and then catalytically reformed, which rearranges or restructures the hydrocarbon molecules in the naphtha as well as breaking some of the molecules into smaller molecules to produce a high-octane component of gasoline (or petrol).

There are hundreds of different petroleum crude oil sources worldwide and each crude oil has its own unique composition or assay. There are also hundreds of petroleum refineries worldwide and each of them is designed to process either a specific crude oil or specific types of crude oils. Naphtha is a general term as each refinery produces its own naphthas with their own unique initial and final boiling points and other physical and compositional characteristics.

The first unit operation in a petroleum refinery is the crude oil distillation unit. The overhead liquid distillate from that unit is called virgin or straight-run naphtha and that distillate is the largest source of naphtha in most petroleum refineries. The naphtha is a mixture of many different hydrocarbon compounds. It has an initial boiling point (IBP) of about 35 °C and a final boiling point (FBP) of about 200 °C, and it contains paraffins, naphthenes (cyclic paraffins) and aromatic hydrocarbons ranging from those containing 4 carbon atoms to those containing about 10 or 11 carbon atoms...

https://en.wikipedia.org/wiki/Petroleum_naphtha

[GatoGordo]

2. Amuay was the shining beacon of hope for Venezuela

But like everything else in Venezuela under 20 years of Chavismo, it has been neglected to the point of irrelevance.

Mass desertions at Amuay (and other PdVSA refineries) by skilled engineers and technocrats.
Inability to secure maintenance/repair parts due to malfeasance and corruption
Inability to secure maintenance/repair parts due to lack of funds (cash only. Real cash, not the worthless Bolivar)
Funds for new exploration and recovery of existing wells "diverted" into the hands of the Chavists/FANB

The list is seemingly endless. The point being, after twenty years, the Chavists incompetence has manifested itself in the complete breakdown in infrastructure. Even their Golden Goose, PdVSA is going to need an investment of over $60 billion dollars (estimated) to get it up to where it was before Chavismo. And that is IF anyone feels brave enough to trust any future Venezuelan government to invest it wisely. (Venezuela wasn't exactly run by "trusted stewards" prior to Chavez) PdVSA might end up partially privatized in order for Venezuela to be dragged out of their self made abyss.

Which is causing many Venezuelans to cut off their nose to spite their face. (The Chavists love to do this!) They would rather live in abject misery than to allow someone else to "profit" from their recovery. (Chavez would go on for HOURS about this in his cadenas) Venezuelans are fiercely proud of their once enviable oil industry, and would rather feast on dung beetles and drink from the Rio Guaire than see it partially privatized. (Nationalized in 1976?)

So as far as naphtha? The ability CAN be there. But the spirit isn't willing. And currently there is no forward thinkers in ChavismoLand.

[MRubio]

3. Your question is a good one Ghost Dog and...

.....the answer is, yes, Venezuela could be producing most of its naphtha needs but as GatoGordo explains, like everything else in this country, the refinery system is now in shambles.

While the great majority of Venezuela's world-leading oil reserves consist of heavy oils from the Orinoco Belt that require the addition of diluents and other means in order to produce the stuff, Venezuela still produces enough "light" oil elsewhere in the country that that oil could be the feedstock for the diluents they need. The Furrial Field, which is quite close to where I live (I can see the flares easily at night) is an extensive field discovered in 1986, if memory serves, that produces a lighter oil and lots of gas-condensate. It's been under a gas-injection program, hence the extensive flaring, since about the time Chavez was first elected to office.

Here's an interesting read on the Furrial Field and the effects chavismo have had on it.

https://www.caracaschronicles.com/2016/07/28/el-furrial/

[MRubio]

4. BTW, most Venezuelans are stunned when I tell them....

......that the country has, for some time now, been importing (at world prices) the majority of the gasoline used in the country. The regime never bothers to tell the public that they are no longer capable of producing what the country needs in the way of gasoline. "Everything's fine, we have the largest oil reserves in the world". LOL

For those who aren't aware of how cheap gasoline is here, it's practically given away. Fill up your tank, pay with a 2 bs note, and they still owe you change.....which they can't make because 2 bs is the smallest denomination note. A black market dollar today is worth somewhere around 3700 bs.......run the numbers.

A few weeks ago, in anticipation of gasoline shortages because of the sanctions, I paid a guy who works for PDVSA to fill up a 55 gallon steel drum to have on hand here at the house. He charged me 5,000 bs.