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Venezuelan Oil Refinery Halts Units After Fire

Venezuela's Cardon refinery halted its distillation units on Friday following a fire, anonymous sources told Reuters.

A fire that began with a bang following a gasoline leak has been put out, but not before reaching a power substation in the refinery complex. This triggered a power outage and the subsequent shutdown of three crude distillation units.

The Cardon refinery is part of the Paraguana refining center—the single largest refining center in the region with a processing capacity of nearly 2 million barrels. The complex also includes the Amuay refinery, which was subject to an explosion sparked by a water leak in 2020—and that was just the latest major incident.

Refinery operators are attempting to bring the crude distillation units back online at Cardon, the sources said.

"(The leak) occurred after 4 in the morning and was reported immediately. The firefighters arrived to control it. The staff proceeded to shut down the plant and, while the plant was being stopped (...) the fire broke."

Venezuela's refining glory days are squarely behind them, crippled by corruption, lack of maintenance, and insufficient investments for more than two decades. The lack of attention to its refineries has resulted in accident after accident and working capacity that is just a fraction of the nameplate capacity.

The result of Venezuela's refining industry mismanagement is an end to cheap, abundant retail fuel for its citizens in favor of high fuel imports. It also resulted in a 2020 agreement with Iran to get its help with restoring its refining capacity to its former glory. That deal was largely scuppered, however, when Venezuela was unable to live up to its end of the bargain.

Venezuela's refining industry has also been hampered by U.S. sanctions, which have been given a temporary reprieve that is set to expire in April.

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By Julianne Geiger for Oilprice.com

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