Collapse of power supply drags down PdV refineries

OREANDA-NEWS. October 06, 2015. Back-to-back power outages shut down Venezuelan state-owned PdV's 940,000 b/d CRP refining complex in Paraguana and its Bajo Grande terminal yesterday, exposing a broader collapse of power supply nationwide.

According to an internal report obtained by Argus, crippled state-owned utility Corpoelec anticipates "more frequent blackouts of longer duration" over the coming 12-18 months.

PdV and Corpoelec have not commented officially on the causes of the latest blackouts, but the 15 September Corpoelec report indicates that a combination of equipment failure and drought has eroded operational thermal and hydro generation capacity.

Corpoelec, which depends on the central government for 100pc of its capital budget for maintenance and new infrastructure, has also been impacted by an almost 55pc plunge in PdV's average oil export price in 2015, to \\$40.02/bl for the week ending 2 October compared with \\$88.42/bl in full-year 2014.

"There's no money this year for maintenance and upgrades, and for new generation projects like Tocoma," a Corpoelec official tells Argus.

Power supply in western Venezuela, where the CRP refining complex is located, was destabilized in mid-September when the 660MW Ramon Laguna thermal complex near Maracaibo shut down because of transformer and other equipment breakdowns that could take up to nine months to repair, Corpoelec reports show.

The utility has 2,860MW of thermal power generation infrastructure installed in the oil-producing western state of Zulia to supply statewide demand of over 3,000MW. But only 1,500MW of Zulia?s thermal generating capacity was operational before the Ramon Laguna plant shut down in September.

Before Ramon Laguna broke down, Corpoelec was offsetting Zulia's thermal outages with 1,000MW from the Simon Bolivar (Guri) hydroelectric generation complex on the Lower Caroni River in the southern state of Bolivar, over 633mi (1,019km) from the Zulia state capital of Maracaibo.

But further hydro dispatch to make up for Ramon Laguna is restricted by deficient transmission.

Even if transmission were expanded, Corpolec's reports note that the Guri reservoir is at its the lowest recorded level for this time of year in the past half century.

Corpoelec "can't use more Guri water to generate more hydropower, and doesn't have sufficient operational thermal capacity either," a senior executive with the utility tells Argus.

"Transmitting higher hydropower loads from the Caroni through the national 750kV and 400kV transmission grid to compensate for the thermal power generation deficit in central and northwest Venezuela is not an option either because the transmission grid is in a very precarious state," the executive added.

Since mid-September Corpoelec has been forced to expand full time power rationing up to 20GWh/d everywhere nationally except in the capital Caracas. Corpoelec says the rationing is part of planned maintenance.

Fetraelec electricity union officials tell Argus that little actual maintenance occurs in the areas where power is now cut daily for up to 10 hours. "No vehicles, no tools, no replacement parts, no maintenance," a Fetraelec power union official said.

Corpoelec declined to comment.

Besides the inoperative Ramon Laguna plant near Maracaibo, other key Corpoelec thermal power generation assets currently at their lowest operational levels in over 16 years include 1,520MW Termozulia in Zulia state, 2,000MW Planta Centro complex in Carabobo state and the 1,980MW Tacoa complex in Vargas state near Caracas.

Corpoelec's 15 September report pegs Termozulia's operational capacity at less than 700MW, Planta Centro at 300MW and Tacoa below 900MW – roughly a combined 1,900MW or 34.5pc of their combined installed capacity of 5,500MW.

Of Corpoelec?s 17,500MW of official thermal power generation infrastructure nationally, 6,000MW or 35pc was operational as of mid-September.

Most of the power stations run on fuel oil and diesel, but recently PdV started delivering some natural gas that it buys from Spanish Repsol and Italian Eni?s new offshore Perla field near the CRP. With the CRP down and thermal generating units limited, it is not clear if the Perla gas is still coming ashore or whether it is being flared.

The latest refinery outages shed light on how the Venezuelan power grid's structural collapse is impacting PdV's core downstream operations.

Crude processing at the Amuay and Cardon refineries that comprise the CRP complex on the Paraguana peninsula will take up to 10 days to restore following yesterday?s blackouts, refinery officials tell Argus. The two facilities that make up almost two thirds of PdV?s domestic refining capacity were already forced off line by successive blackouts in March 2015. Outages have also knocked out PdV's 140,000 b/d El Palito refinery in Carabobo state twice this year.

Frequent outages in Anzoategui state also have caused some disruptions this year at the 186,000 b/d Puerto La Cruz refinery, according to Futpv oil union officials at the facility.

Even though PdV has some independent generating units, upstream oil developments have likewise been affected. Former energy minister and PdV chief executive Rafael Ramirez acknowledged in mid-2014 that a lack of power generation infrastructure in the Orinoco oil belt is hindering PdV's new joint venture plans with foreign oil companies to add 2.54mn b/d of new extra-heavy crude production capacity by 2020.

President Nicolas Maduro blamed this week?s blackouts on alleged opposition saboteurs that are "executing a plan to destabilize public services before parliamentary elections" scheduled for 6 December.