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The new policy measures will make provisions has also blamed the US sanctions regime for
for the introduction of monitoring equipment supply problems. “This is a war, my dear fellow
and automated fuel sales at filling stations, countrymen who listen to me, a brutal war,”
Maduro said. He also stressed, though, that the he said on May 30, according to a report from
rise in gasoline prices would not affect fares on Bloomberg.
public transport networks. Venezuela is home to about 1,800 stations in
For his part, El-Aissami noted that Caracas Venezuela. Only 240 have remained open since
was not raising prices for diesel. This type of March, when the president introduced corona-
motor fuel is so important for the industrial sec- virus (COVID-19) related lockdown measures
tor that the government is keeping all subsidies that included restrictions on fuel sales, owing to
in place, he explained. very low inventories. Caracas indicated at the
Maduro has justified the changes by describ- weekend that it expected more than 1,500 sta-
ing them as part of a wide-ranging effort to tions to resume operation once the new pricing
alleviate gasoline shortages in Venezuela. He rules took effect on June 1. ™

Fire casts shadow on Venezuela’s

Orimulsion strategy for heavy crude

EARLIER this year, Sinovensa, a joint venture fields, according to local reports. As a result,
that accounts for 15% of Venezuela’s oil pro- Venezuela’s heavy crude production went down
duction, suffered a fire. The incident has cast by 88,000 bpd.
a spotlight on the cracks in Caracas’ strategy The fire at the Morichal centre took more
for marketing the country’s ultra-heavy crude, than 24 hours to put out, and the facility could
which dates back to the 1980s. very well suffer similar incidents in the near
Venezuela has developed its own proprietary future. At least three forest fires reached oil
technology to turn ultra-heavy oil into a fuel infrastructure in the Orinoco oil belt in April
called Orimulsion, and in 1998, its state-run oil alone, according to a Reuters report.
company PdVSA established a company called As such, Sinovensa’s travails serve to high-
BITOR to produce it. The fuel mixture consisted light the weakness of the Orimulsion strategy,
of 30% water and 70% oil-heavy crude from the which has been one of the government’s most
Orinoco Oil Belt in south-eastern Venezuela, important investment projects to date.
one of the world’s largest crude deposits. It is
both suitable for thermal power plants (TPPs)
and cheaper than coal.
The government of President Hugo Chávez
heavily promoted Orimulsion in the late 1990s,
as it sought new foreign investors and a widen-
ing of its trade relations. It was eventually able to
sell the fuel to Japan, Canada and Italy for use in
power plants.
Additionally, Caracas signed a number of
agreements with Chinese investors in 1999
with the intent of expanding Orimulsion pro-
duction. Most of these projects were never
launched. Sinovensa, a 60:40 joint venture
between PdVSA and China National Petroleum
Corp. (CNPC), was an exception. It went on to
produce around 105,000 barrels per day (bpd) of
oil and remained in production until earlier this
year, even as Venezuelan oil output plummeted
against the backdrop of US sanctions.
Nevertheless, the joint venture had to halt
production in April after a fire at the Morichal
Operational Complex. The loss of electricity and
subsequent oil spill significantly affected pro-
duction in the Carabobo block, where Sinovensa
operates, resulting in the shutdown of 212 wells
at the Petrocarabobo and Petroindependencia Sinovensa’s Jose plant is in poor condition (Photo: Dialogo Chino)

Week 22 04•June•2020 www. NEWSBASE .com P13