MOSCOW (MRC) -- Venezuela's state-run PDVSA is preparing to recover a portion of the oil output lost in recent months by boosting crude blending operations at its main producing region, the Orinoco Belt, according to sources and a company document, as per Hydrocarbonprocessing.
U.S. sanctions imposed since 2019 have deprived PDVSA of the diluents it imports to produce exportable crude grades. The sanctions have cut off its customer base and the number of tanker owners willing to work with the firm, causing oil exports to fall to their lowest levels since the 1940s and cutting heavily into PDVSA's production.
PDVSA and its joint ventures produced 336,000 bpd of crude at the end of August, internal figures from the company showed. Just a year earlier the nation's output was 933,000 bpd, according to figures reported to OPEC. Venezuela's oil exports are the nation's largest source of foreign revenue.
Two weeks ago, PDVSA restarted blending operations at the joint venture Petrosinovensa, which it shares with China National Petroleum Corp, after months of paralysis. It is now processing 64,500 bpd of diluted crude oil (DCO) to produce about 77,000 bpd of exportable Merey crude, according to the document.
PDVSA finished discharging a 500,000-barrel parcel of Iranian condensate for another joint venture, Petropiar, operated with U.S.-based Chevron Corp, aiming to boost blending operations there, the document also showed. The condensate, to be used for diluting Venezuela's extra heavy crude, arrived last weekend in the nation's main oil port of Jose in an unnamed very large crude carrier (VLCC). Tracking service TankerTrackers.com identified the vessel as Iran-flagged Horse by using satellite images.
PDVSA did not reply to a request for comment. The full content of the shipment from Iran is unknown, but imported heavy naphtha is also expected to be used as diluent by PDVSA to jumpstart output, one of the sources said. PDVSA is struggling to deliver Merey heavy crude to its customers in Asia and Europe due to quality problems, according to company documents.
The issues, which have caused delays in exports, are forcing the firm to replace scheduled cargoes of Merey crude with other grades, including Hamaca and Leona 24, the documents showed. PDVSA plans to switch a portion of its Orinoco Belt crude production, currently entirely focused on Merey, to DCO, the sources said.
The company also expects to continue draining oil inventories as nearly full storage due to a lack of buyers in recent months forced it to slash output. As of Sept. 14, its stocks of Orinoco Belt heavy crudes had declined to 8.15 MM barrels from almost 15 MM barrels three months ago. Three separate vessels carrying Iranian fuel bound for Venezuela - the Forest, Fortune and Faxon - are expected to begin arriving at the end of this month, according to Refinitiv Eikon data, to ease the country's acute shortage of gasoline.
As MRC informed before, Russian state oil company Rosneft's decision to cease operations in Venezuela and sell its assets there to a Russian government-owned company was a "maneuver" made in reaction to collapsing oil prices, a US State Department official said earlier this year.
We remind that Angarsk Polymers Plant, part of Russian oil giant Rosneft, has resumed its low density polyethylene (LDPE) production after an unscheduled shutdown because of a technical issues at the ethylene unit. The plant"s customers said Angarsk Polymers Plant had brought on-stream its LDPE production by 28 August after the forced shutdown due to technical problems at its ethylene production. And the first shipments of polyethylene (PE) to customers began on 31 August. The outage lasted slightly over two weeks and began on 10 August The plant"s annual production capacity is about 75,000 tonnes.
According to MRC's ScanPlast report, June estimated LDPE consumption in Russia grew to 55,260 tonnes from 45,490 tonnes a month earlier. Kazanorgsintez raised its PE output after a spring shutdown for a scheduled turnaround. Russia's estimated LDPE consumption rose to 291,270 tonnes in January-June 2020, up by 5% year on year. Russian producers raised their production, and LDPE imports also increased.
We also remind that Russia's overall PE production totalled 1,712,400 tonnes in the first seven months of 2020, up by 58% year on year. Linear low density polyethylene (LLDPE) accounted for the greatest increase in the output. At the same time, overall PP production in Russia increased in January-July 2020 by 24% year on year to 1,063,700 tonne. ZapSibNeftekhim accounted for the main increase in the output.
MRC