Amuay, Venezuela’s largest refinery, could soon be managed by the Iranian government. The measure would be part of a new attempt by the regime of Nicolas Maduro to “guarantee fuel for the people” amid a severe petrol shortage in a country with the world’s largest oil reserves.
The crisis can no longer be hidden. Venezuelans must now add moving around a country with no fuel to a long list of problems. In view of this reality, Maduro’s announcements are piling up. And so are his failures. The leader announced a plan to restart the El Palito refinery. He also announced the restructuring of PDVSA, dismissed the company’s president, and appointed one of the 10 most-wanted fugitives by the U.S. government as the new Oil Minister. Fuel shortage, however, continues to deepen.
The new possible deal with the Iranian government is now added to this long series of failed attempts. The plan is to reactivate the Amuay refinery in the state of Falcon. But, as in previous opportunities, the government’s lack of transparency continues to be the norm.
Alguna vez Gamal Abdel Nasser dijo: “El petróleo es la espada del islam”. La espada del islam la están trayendo a Venezuela en vuelos de una línea aérea iraní
— Jose Toro Hardy (@josetorohardy) April 30, 2020
Flights from Iran
All signs seem to indicate that Maduro’s most recent strategy is based on a possible agreement between state-owned PDVSA and the Khatam consortium; a conglomerate of companies controlled by Iran’s Revolutionary Guard that also has a project management units and oil refineries.
The first unofficial information began to circulate after Tareck el Aissami, accused by the U.S. of drug trafficking and support of terrorism, was appointed as the new Oil Minister on Monday.
Gustavo Marcano, Minister Counselor of the Venezuelan Embassy to the United States, said that this move was part of the country’s agreements with Iran.
La designación de Tareck El Aissami, como “Ministro” de petróleo, es otro de los acuerdos entre el narcorégimen e #Irán.
Maduro reparte espacios de “poder” a grupos terroristas, a cambio de sostenerse en el poder.
Los países democráticos del mundo harán frente a esta amenaza. https://t.co/Kx9TPw9iRf
— Gustavo Marcano. (@GustavoMarcano) April 27, 2020
This week, Bloomberg reported that two Iranian planes owned by sanctioned airline Mahan Air arrived at the Maiquetia Airports in Caracas and Falcon on Wednesday and Thursday; amid strict air travel bans imposed by Maduro himself due to the global pandemic. The firm assured the airplanes carried diluents for petrol production. They also carried spare parts and specialized technicians to help restart the Amuay Refining Complex.
Although these flights have not been officially confirmed, Maduro’s Minister of Foreign Affairs Jorge Arreaza did inform on April 13 that Venezuela and Iran were working on cooperation mechanisms amid the COVID-19 pandemic. The agreements included communication between scientists, support to the OPEC+ production cut deal, and rejecting the U.S. sanctions.
The arrival of Iranian personnel to Venezuela in the last couple of days, as the Mahan Air flights have certified, could mean that the Khatam Consortium has already taken control of the Amuay Refinery.
"Estamos preocupados por comportamiento desestabilizador de Irán en Venezuela: Aviones iraníes han transferido apoyo desconocido al régimen. Nuestros esfuerzos para ayudar a restaurar democracia continúan y pedimos que régimen de Maduro se haga a un lado" pic.twitter.com/FDaG3vQctB
— USA en Español (@USAenEspanol) April 30, 2020
No response capacity
The need to make a deal with Iran stems from the fact that the Venezuelan regime is not equipped to produce gasoline.
The nation’s refining capacity is comprised by three complexes. First, there’s the Paraguaná Refining Center, formed by the Amuay, Cardón, and Bajo Grande refineries, (western region). And also the El Palito refinery (center), and the Puerto La Cruz refinery, (eastern region).
Spokesmen from the Gente del Petroleo Civil Association and Unapetrol, organizations formed by former PDVSA workers that were fired for political reasons; assure that none of those refining centers are currently active.
In this scenario, the only way out would be to meet the domestic demand in the Venezuelan market. However, limitations to do business with PDVSA, due to the sanctions, make it difficult to purchase fuel overseas.
#26Abril /Esta noche llegó al terminal marítimo de Guaraguao (Anzoàtegui) el tanquero PIONEER y descarga 20 mil bls de gasolina de 91 oct, que el régimen compró al exterior. Si no hubieran destruido la industria petrolera hoy estaría produciendo 1 millón 300mil bls de gasolina. pic.twitter.com/qIZItESfPK
— Soy Gente del Petróleo (@soygdelpetroleo) April 27, 2020
Russia: The next step?
In addition to the lack of refining capacity, Venezuela is also facing the sharp fall of oil production. While in 1998 (when Chavez won the elections) PDVSA was producing nearly 4 million barrels per day, nowadays it barely reaches 700,000 barrels.
The reason behind this output drop is the same for the decline in refining capacity: 20 years of politicization of the country’s most important industry, which went from being managed by technicians and managers to being in the hands of party officials.
Chavismo has used the mixed companies formed with foreign companies to maintain a modest production. Nonetheless, the lack of incentives and now the sanctions imposed by the Trump administration are reducing these companies’ operations on Venezuelan ground.
Most recently, Russian firm Rosneft has decided to terminate operations in the country. But this exit was denounced as a way for Russian President Vladimir Putin to continue his support to Nicolas Maduro.
In fact, as it announced its decision to sell its assets in Venezuela, Rosneft also said it would transfer its assets in the country to a company owned by the Russian government.
The name of said company has not been revealed. Some speculate it could be Roszarubezhneft, a company constituted at the same time that Rosneft announced its exit. This strategy could leave the prolific Orinoco Belt, the largest field in the South American nation, under Russian control. Meanwhile, Venezuela’s largest refinery will be in the hands of the Iranian government.
MG Manuel Quevedo fue designado presidente de #pdvsa el 26/nov/2017 y fue removido del cargo el 27/abr/2020, fueron 29 meses en el cargo. Aqui les dejo uno de los hecho más relevantes durante su cargo.
Gráfico con ambas fuentes. #28Abril pic.twitter.com/KXZWsi8KQe
— Edgar Chacín (@geologochacin) April 28, 2020
For more information, check Energía16