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Venezuela Expects Refinery Output Capacity To Drop To 44%

Maduro

Venezuelan state energy giant PDVSA expects its refineries to run at 44 percent capacity in August due to crude supply issues, Reuters reported on Tuesday.

At maximum output, the refinery network can process up to 1.64 million barrels per day, but crude supply issues last month caused the facilities to run at just 45 percent of their maximum level, the report said.

The biggest declines in crude processing will stem from scale-backs in the Puerto la Cruz, Amaya and Cardon refineries. Of the twelve distillation units present at those three facilities, seven are inactive due to overdue repairs and limited supply of essential crude grades.

If planned maintenance work at Cardon is completed successfully, another distillation unit could restart next month.

Low oil output since 2012 has stunted the production of the nation’s refineries. The Puerto La Cruz refinery, which processes 187,000 barrels per day of crude regularly, now runs at 32 percent of its maximum level.

To combat the chronically low productivity of its refinery network, the company said it would also restart a distillation unit at the 335,000 bps Isla refinery on Curaçao – which refines both domestic and foreign grades of crude. Most of the foreign oil found there is from the United States.

Related: This Oil Price Rally Has Reached Its Limit

The U.S. government is discussing sanctions against Venezuela’s oil industry after a recent Constituent Assembly election that Washington’s UN ambassador Nikki Haley called a “sham”. According to sources who spoke to Reuters on condition of anonymity, punitive measures are unlikely to include a ban on Venezuelan oil exports, but could involve suspending U.S. light crude exports to the South American country.

Crude exports will rise to 1.37 million bpd in August due to inactivity in the refining sector. Last month, the monthly rate stood at 1.36 million bpd. Still, revenues from the higher exports will not cover the loans and international debt accrued by PDVSA and Caracas in recent years due to the global oil price crisis.

By Zainab Calcuttawala for Oilprice.com

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