PDVSA Struggles to Stabilize Key Fuel-Maker in Wake of Shortages

(Bloomberg) -- In a last-ditch attempt to ease the fuel crisis in Venezuela, employees at state-owned PDVSA are working around the clock to get a key gasoline-making unit to run. Even retired workers have been called into action.

A catalytic cracker at PDVSA’s El Palito refinery was restarted this week after a month of trials, according to people with knowledge of the situation, who asked not to be identified because the information isn’t public. But the plant is operating in unstable conditions and is unable to produce fuel. Issues with basic necessities like electricity and water at the refinery have yet to be solved, the people said.

Restarting the catalytic cracker at El Palito has been a main priority for Petroleos de Venezuela SA since last year. Gasoline shortages across Venezuela have only worsened amid the coronavirus pandemic, an ongoing economic meltdown and U.S. sanctions that have barred fuel imports.

The restart is part of a larger plan that includes a call on PDVSA retirees and private local oil companies, according to a document seen by Bloomberg. Retirees were summoned to work at El Palito by its managers, and at the same time, PDVSA is discussing plans to boost crude production at light fields at Monagas to supply the refinery, according to the document and a person with knowledge of the matter.

In Caracas, the military has controlled pump stations since mid-March. PDVSA is relying on El Palito to produce 35,000 barrels of gasoline a day to provide relief as the shortages disrupt food supply transportation lines and prevent humanitarian aid from reaching destinations.

Shaky Operations

El Palito has a capacity to process 140,000 barrels of crude a day, but the refinery has failed to churn out a steady supply of gasoline. Shutdowns have occurred on and off since last year, with workers making repairs using existing parts from the Amuay refinery instead of new ones. Water services are not fully restored at El Palito and power still relies on the unstable nationwide electricity grid. Amuay and Cardon refineries are in even worse shape.

PDVSA’s refineries have been running at reduced rates for years due to lack of maintenance and investment, as well as brain drain. In September 2018, months before sanctions were imposed, it was refining at less than a quarter of capacity, and in December, refineries were working at less than 10%.

PDVSA and two of the companies participating in the talks did not respond to requests for comment. Two other companies said they have no knowledge of any PDVSA plans or talks.

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