Exclusive: After renovating the smallest oil refinery in Venezuela, Iran has decided to repair the largest oil refinery in Venezuela

Fishing boats are moored on the coast from the Paraguana Refining Center (CRP) after the September crude oil spill from the pipeline connecting production areas with the state’s largest oil refinery, in Punta Cardon, Venezuela, October 2, 2021. Photo taken October 2, 2021 REUTERS/Leonardo Fernandez Fil√≥ria

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CARACAS (Reuters) – Iranian state companies have begun preparations to renovate Venezuela’s largest oil refinery, the Paraguana refinery, with a capacity of 955,000 barrels per day, after a contract to repair their smallest facility, four people close to the talks said.

The agreement would deepen an energy relationship that has become a lifeline for Venezuela’s crumbling oil industry amid a crisis caused by decades of mismanagement and underinvestment, exacerbated by US sanctions on the South American country.

The Middle Eastern country, which has also been sanctioned by the United States, has supplied the government of President Nicolas Maduro with fuel and diluents to manufacture exportable grades of crude, and since 2020 has provided spare parts to repair and modernize Venezuela’s 1.3 million barrels per day refining network.

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A unit of the state-owned National Iranian Oil Refining and Distribution Company (NIORDC) this month signed a 110 million euro ($116 million) contract with Venezuelan state oil company PDVSA to repair and expand the country’s 146,000 barrels per day El Palito refinery. Central Region.

People said her next project is Paraguana, a two-refinery complex that is among the largest in the world, with a contract now being negotiated. The center, known as CRP, was operating at just 17% of capacity in April, according to independent estimates.

“In about a year, Iran should be able to bring its people to Parajuana,” one person said. “They have focused a lot on the preparations, including housing the workers.”

Earlier this year, Iranian state companies supplied Parajuana with spare parts to restart a gasoline manufacturing unit. A person familiar with the equipment, manufactured in North America, arrived in Venezuela from China after the Iranians dealt with procurement and transportation.

This person added that many Chinese companies avoid direct dealings with Venezuela to reduce risks related to sanctions or unpaid bills, and only accept deals if a third party handles orders and payments.

PDVSA, which has not publicly disclosed details of recent agreements with Iran, did not respond to a request for comment. NIORDC did not immediately respond to a request for comment.

new partners

PDVSA has tried and failed in recent years to attract foreign investment to its refineries, including a canceled deal with Chinese firms. He has been more successful with oilfield services and maintenance companies willing to accept payment for oil and fuel to avoid unpaid bills for notorious Venezuela.

But there is a growing need for a capital injection worth millions of dollars to secure adequate fuel supplies for the country, whose demand is slowly recovering to pre-pandemic levels.

While Iranian Oil Minister Javad Ogi was visiting Caracas in early May, two supertankers carrying Iranian oil were emptying into Venezuelan waters as part of the exchange arrangements launched by state companies last year. Read more

In El Palito, a crude distillation unit restarted in May after months of shutdown. The refinery is operating at half capacity mostly due to equipment provided by Iran, but more work is needed.

Two people said Iran delivered the new parts under a service contract to provide major maintenance and expansion of the facility, which can be paid for with fuel from the same refinery.

Before he can expand the core deep-switching units at El Palito, one worker said, workers must modify and increase the water and gas supply, and modernize the electrical system. Only then can it reach its target of 175,000 barrels per day.

Another worker said, “The major projects that PDVSA was supposed to undertake and could not, will be carried out by Iran.”

(1 dollar = 0.9470 euros)

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Additional reporting by Mersili Guanipa in Caracas, Mariana Barraga in Houston and Tibisay Romero in Valencia. Additional reporting by Desi Buitrago and Bozorgmehr Sharafeddine. Edited by Margarita Choi

Our criteria: Thomson Reuters Trust Principles.


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