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Venezuela Orinoco project back, reduced oil output
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VENEZUELA: February 11, 2003


CARACAS, Venezuela - One of Venezuela's extra heavy Orinoco oil projects restarted with reduced production this week after being down for about two months because of a strike in protest of President Hugo Chavez, while three larger foreign-run projects remained shut, project officials said on Friday.


The Orinoco projects, which partner state oil firm Petroleos de Venezuela (PDVSA) with international oil majors such as U.S. ExxonMobil (XOM.N), ConocoPhillips (COP.N), French TotalFinalElf and Norway's Statoil (STL.OL), have been shut since early in the strike that began Dec. 2 in the world's No. 5 crude exporting country.

The three projects that remain halted - Petrozuata, Cerro Negro, and Sincor - had been at or near full capacity before the stoppage. They use massive processing units to upgrade about 400,000 barrels of extra heavy crude from the Orinoco tar belt into "refinable" synthetic crude and were shut because of a lack of natural gas feedstock from PDVSA.

Staff at the foreign-financed projects did not take part in the strike, which has wide support among PDVSA managers and executives, but nationwide logistical problems kept the projects from running normally.

A fourth project, Hamaca, returned with limited production of 15,000 bpd this week. Hamaca had been producing 35,000 bpd to 40,000 bpd of blended extra-heavy and light oil for export in November as its upgrading unit has not yet been completed.

"We are warming up some of our units, but the crude is going into storage," one source, who asked not to be named, told Reuters.

It was not yet clear if pipeline problems and safety issues at shipping terminals could be cleared up that would allow the oil being pumped to be exported, the source said.

Another Hamaca source said output could be fully restored by the end of the month if the problems were resolved soon.

Chavez, struggling to break the strike and return the country's most important industry, had said on the weekend that the Orinoco projects would be back on line this week.

SYNCRUDE STILL HALTED

Cerro Negro, Sincor, and Petrozuata remain shut as PDVSA has not been able to guarantee a steady supply of natural gas needed to run upgraders.

"We still don't have gas, that's the big limitation," a source with one project said.

In addition, officials said they were not likely to begin exporting synthetic crude from storage until port conditions were declared safe.

The government has enlisted replacement workers at terminals to load vessels, but shippers and foreign firm have hesitated to lift cargoes from uncertified staff that could create an insurance risk.

"The mother companies (operating the projects) need the cash, and PDVSA would like them to start, but there are potential safety concerns. No firm can risk a major oil spill," an official with one project said on condition of anonymity.

Negotiations with PDVSA to secure gas supplies and ports were ongoing, sources said.

Efforts by replacement workers to restart oil exports, which normally supply half of state revenues, have increased shipments to 700,000 bpd, oil minister Rafael Ramirez said on Friday. Venezuela had been exporting nearly 2.7 million bpd before the strike began.

Striking oil workers have said the government has only managed to restart about 1.3 million bpd of production, compared with total Venezuelan output of 3.1 million bpd before the strike.


Story by Matthew Robinson


REUTERS NEWS SERVICE



© 2008 Reuters Limited. All rights reserved. Republication or redistribution of Reuters content, including by framing or similar means, is expressly prohibited without the prior written consent of Reuters.
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VENEZUELA:
Venezuela Orinoco project back, reduced oil output



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