Page 5 - LatAmOil Week 42 2022

LatAmOil COMMENTARY LatAmOil

Implementing an agreement Other refining projects
NewsBase did suggest recently that Venezuela Owji’s words may indicate, then, that Tehran is
and Iran might start making moves to expand relieved to see this deal back on track and serv-
co-operation in the near future, especially as ing as a stepping stone towards further down-
Russia steps up competition for access to “dark stream agreements in other countries outside
fleet” tankers that can be used to deliver oil and Iran. That is, the minister may not be hailing
refined fuels to market while obscuring their the start of processing operations at El Palito
origins. (All three countries have reasons to avail because he views it as the launch of a new refin-
themselves of such arrangements, as they are all ery but because he views it as a stepping-stone
under sanction by the US and, to one degree or towards deals with other countries.
another, other petroleum-importing Western Certainly, there are some officials in Tehran
countries.) who seem to place a premium on this goal. For
However, Owji’s statements about El Palito example, Mohammadreza Mir-Tajeddini, a
should not be viewed as confirmation of this member of the Iranian Parliament’s planning
suggestion. Instead, they may amount to an and budget committee, noted in mid-September
exaggerated show of relief in response to prob- that his country had plans to construct oil refin- Tehran may
lems that arose in August, hampering the imple- eries in Venezuela and Uruguay. The refinery
mentation of agreements signed earlier this year projects will help Iran circumvent the US sanc- simply be
between Tehran and Caracas. tions regime, he told the semi-official Tasnim relieved to see
news agency.
Past problems that the deals
According to a previous report from Argus Show of relief
Media, those problems occurred in August, Nevertheless, it is too early to treat the oil min- it signed with
when PdVSA discovered that it could not refine ister’s expansive statements about the launch of
crude received from Iran as expected because it Iranian oil processing operations at El Palito as Caracas earlier
was too acidic to be handled by the ageing equip- a sign of something larger. They certainly do not this year can be
ment at El Palito. appear to signal something as significant as the
The NOC had tried to introduce the feed- opening of a new refinery, and they do not even implemented
stock into the plant but discovered that it was necessarily indicate that Venezuela and Iran are
causing operational difficulties in the distilla- embarking upon anything new. properly now
tion tower that continued for days afterward. As Instead, they may show that Tehran is simply
such, it redirected the Iranian crude feedstock relieved to see that the package of deals it signed
to the Centro de Refinacion Paraguana (CRP), a with Caracas earlier this year can be imple-
430,000 bpd complex in the western part of the mented properly now.
country. That package provides for National Iranian
Iran was at the time supplying Venezuela Oil Co. (NIOC) to provide PdVSA with a vari-
with crude oil that had a specific gravity of ety of needed goods and services – including gas
around 28 degrees API. This was classified as condensate and crude that can be used as blend-
a medium grade of crude. It was lighter than stock for Venezuela’s extra-heavy oil, as well as
Merey, one of Venezuela’s main export grades, refined petroleum products, refinery parts and
which has a specific gravity of about 16.2 degrees assistance in repair and maintenance work –
API, and was designed to serve as a diluent for in exchange for oil supplies. It also includes an
locally produced extra-heavy crude so that El accord signed in early May under which the Ira-
Palito could increase the production of refined nian side must assist PdVSA with repair opera-
petroleum products for local use. tions at El Palito. ™

Venezuelan Oil Minister Tareck El Aissami (C, unmasked), shown standing in front of El Palito refinery in June 2022 (Photo: PdVSA)

Week 42 19•October•2022 www. NEWSBASE .com P5