Two nationwide power outages have severely impacted the operations of Petróleos de Venezuela, S.A. (PDVSA) in March. The first, which started on 7 March and lasted seven days, resulted in production dropping to 1940 levels across the country, the closure of the Jose terminal, and the closure of all Orinoco heavy upgraders and Sinovensa. Orinoco production, which has already been hampered by the diluent shortage and now the consecutive blackouts, was further hindered by a fire at Petro San Félix, which shut down the upgrader, bringing most upgraders out of service. Year to year, conventional production has fallen more than 60%. Light and medium grades contributed to overall losses in Western conventional production. The Eastern conventional grades, Mesa-30 and Santa Barbara 35 (SB-35), are in steep decline. Following US sanctions on naphtha, these conventional grades have become critical to Orinoco production as they are used to replace naphtha as diluent in heavy crude upgraders.

Refinery runs have fallen to zero. Current refinery operations are not producing any products, instead using the refinery to desalt incoming crude. Crude exports have stayed above approximately 1 MMb/d in recent months from crude inventory. This result was possible through significant volumes of crude inventory and floating storage, which have fallen almost 4 MMbbl since February. Venezuela's fallen production has impacted heavy, sour shortage in key markets such as US, China and India.

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Posted 13 May 2019 by Ha Nguyen, Executive Director, Global Oil, S&P Global Commodity Insights

This article was published by S&P Global Commodity Insights and not by S&P Global Ratings, which is a separately managed division of S&P Global.