Gas deficit hinders Venezuela iron and steel

OREANDA-NEWS. April 14, 2015. Venezuelan state-owned iron briquettes and steel producers in Bolivar state say natural gas deliveries from state-owned oil company PdV still have not recovered three weeks after copper cable thieves disrupted operations at a crude and gas flow station in Monagas state.

Executives with briquettes makers Comsigua, Briqven and Briquetera Orinoco said PdV's gas deliveries to their plants in Bolivar have been running more than 40pc below their daily needs since the flow station incident on 26 March.

The incident was reported initially by the oil company as an "armed commando attack," but it was later revealed to be an internal robbery. Three PdV employees, including the flow station's supervisor and chief operator, have been arrested on terrorism and organized crime charges for stealing almost two miles of copper cable, stripping the flow station's entire power grid, the attorney general's office said.

"First it was the attack against the flow station, then it was downtime due to holy week holidays, and this week the excuse is that something is being repaired," an executive with state-owned steelmaker Sidor said.

PdV's inability to consistently deliver the gas supplies needed by the companies is "the biggest bottleneck" faced by the iron and steel industries, an executive with state-owned iron company Ferrominera Orinoco (FMO) said. "Without gas we can't operate our iron processing plants, can't produce iron pellets and briquettes," he said.

But briquettes producers are hopeful that the gas supply deficit holding back the recovery of the state-owned iron industry is a priority for the new state-owned Venezuela Steel Corporation (CSV) that was incorporated last month to absorb all of the country's steel making businesses under one umbrella.

Briquettes makers are hopeful that CSV also will quickly absorb the four state-owned briquettes makers, believing that bringing the briquettes producers under direct army control improves their chances of solving problems like chronic gas supply deficits.

CSV's new president, army general Jesus Zambrano, also is iron producer FMO's chief executive. CSV's executive vice president is steelmaker Sidor's chief executive, army general Tomas Schwab. CSV's top chief executives report directly to state-owned industries Minister David Cabello, who is also the longtime chief executive of the Seniat national tax authority and a brother of National assembly president Diosdado Cabello.

Cabello as minister can raise the discussion more effectively with PdV on the need to deliver gas supplies to iron briquettes and pellets producers, a Comsigua executive explained.

"PdV can ignore the briquettes producers, but it cannot ignore minister Cabello," he said.