PdV reveals new normal of light crude imports

OREANDA-NEWS. November 13, 2015. Venezuelan state-owned PdV has been purchasing 48,000 b/d of light crude on the spot market since July for the 325,000 b/d Isla refinery in Curacao in order to free up domestic light grades for blending, downstream chief executive Jesus Luongo said in a statement.

PdV's spot purchases of mostly African light grades for processing at Isla have allowed it to use more locally produced Mesa and Santa Barbara grades as diluent with Orinoco extra-heavy crude. The blend produces 16°API Merey, a grade that is making up a growing share of the company?s crude export basket.

PdV plans to continue importing light crude next year as new Orinoco upstream joint ventures like PetroCarabobo and PetroMiranda ramp up production.

The company is currently weighing term contract options with 15 potential suppliers, Luongo said.

Shell, Statoil, Total and Rosneft are among the candidates, the energy ministry tells Argus.

PdV's market discussions offer the option of receiving payment in kind with Merey 16, Luongo said.

He said the imports will rise to more than 66,700 b/d in early 2016 as larger volumes of Mesa and Santa Barbara are earmarked for blending with Orinoco crude, which has a quality of 8-10°API.

Light crude imports will continue to grow as PdV's seven new Orinoco joint ventures develop combined peak output of 2.54mn b/d, Luongo added.

A local oil executive told Argus that the ventures are "currently short about 400,000 b/d of diluent and are still building infrastructure to transport imported light crude and naphtha from Jose (in Anzoategui state) to the production sites in the oil belt."

PdV's growing demand cannot be covered with Venezuelan light crude in the near term, Luongo said. "Our light crude reservoirs are at a mature stage and it's not possible to increase their current production."

PdV's light crude production averaged 416,000 b/d in 2014 compared with 577,000 b/d in 2010. Medium crude output in the same period declined from 863,000 b/d in 2010 to 619,000 b/d in 2014, according to the company's 2014 annual report.

Energy ministry officials say PdV's falling light and medium crude production can be reversed. "The technologies exist to revive mature oil fields, but currently we don't have the cash resources and the partnership model is too rigid," a ministry official said.

PdV's current strategy of importing light crude and naphtha for diluent with Orinoco extra-heavy crude is a "temporary initiative, until new refineries and upgraders associated with the new oil belt joint ventures are built and commissioned," an energy ministry official said.

Luongo said construction of a new upgrader would take up to five years. PdV currently has four upgraders at Jose, in addition to a blending facility.