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PDVSA, Chevron Restart Second Major Oil Blending Facility

PDVSA and Chevron have restarted operations at the blending facility of their joint venture Petropiar, Reuters reports, citing sources who whished to remain unnamed.

The news comes on the heels of a report about the restart of operations at Sinovensa, the joint venture of the Venezuelan state oil company and China’s CNPC. Like Sinovensa, the blending plant of Petropiar was shut down because of excessive stockpiles of crude.

Excessive stockpiles of crude are one of Venezuela’s problems caused by U.S. sanctions targeting its oil company. Now these must have gone down for not one but two blending plants to restart operations, which should be good news for struggling PDVSA.

Blending plants are the facilities in which Venezuela’s superheavy crude from the Orinoco Belt is blended with light crude to make it liquid enough for loading on tankers. After the restart, both the Petropiar and the Sinovensa plants are producing at a rate of around 100,000 bpd of crude.

Yet here the Venezuelan state company faces a new challenge. Shipping operators are unwilling to risk attracting the wrath of Washington by supplying tankers to PDVSA since in August the U.S. widened the scope of its sanctions against Venezuela to anyone doing business with it and has exposure to the U.S. financial system.

Now, commodity traders are turning away from Venezuelan crude as well, so the problem of finding buyers for its crude produced at the restarted blending facilities remains. Earlier this year, unnamed sources told Bloomberg PDVSA that it was loading its oil on smaller vessels but these cost more, adding to the company’s already significant financial burden.

What’s more, if Washington does not extend the sanction waiver for Chevron, the company will have to leave Venezuela, as would Halliburton and Schlumberger, which will likely hurt production severely. The waivers expire later this month.

By Irina Slav for Oilprice.com

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