April 9, 2005
PDVSA to stop orimulsion output within a year

(Business News) - "Venezuela's state oil firm PDVSA will stop producing its patented boiler fuel orimulsion within one year, PDVSA president and energy and oil minister Rafael Ramírez told reporters. The extra-heavy crude previously used to manufacture the fuel will be treated as oil.

Orimulsion production has been reduced from about 80,000 barrels a day (b/d) a few years ago to 40,000b/d these days and even that volume will soon disappear and be merged with crude production, Ramírez said.

The government announced in September last year it would not sign any more orimulsion contracts and would absorb the operations of its Bitor subsidiary into PDVSA East because producing orimulsion unprofitable at today's high oil prices.

PDVSA sells orimulsion at less than US$4 a barrel plus 1% royalty when the product could be sold with conventional blends or processed by Venezuela's four heavy crude upgrade projects and sold at over US$17/b, according to a previous BNamericas report (.)

PDVSA could blend the extra-heavy crude with Santa Barbara benchmark light-to-medium crude to create a 16-degree API crude similar to the BCF benchmark 17-degree API export crude, PDVSA vice-president of exploration and production, Luis Vierma, told reporters.

Another possibility is that PDVSA could upgrade the crude at one of its four existing crude upgraders in the Orinoco belt or process it at a deep conversion refinery, Vierma said.

There are no such refineries operating in the country today, but PDVSA recently announced plans to spend US$2.2bn to upgrade its two existing facilities, El Palito and Puerto La Cruz, into deep conversion refineries.

Production of orimulsion will continue for the time being 'to satisfy the volumes committed by contract,' Ramírez said. 'Some contracts are about to end and others have a year to go,' according to Vierma. (.)".