Background on the Refinery and its Importance
The Cardón refinery, Venezuela’s second-largest with a daily capacity of 310,000 barrels, has been shut down due to a power outage, according to two sources familiar with the refinery’s operations. The refinery is owned by Petróleo de Venezuela SA (Pdvsa), the state-run oil company.
Venezuela’s Refining Sector and Recent Challenges
Venezuela’s refining sector has faced frequent disruptions over the years due to insufficient investment, poor management, and U.S. sanctions that prevent the import of spare parts. In recent months, Cardón has played a crucial role in processing raw materials for some projects in the Orinoco Belt.
Impact of the Power Outage
The power outage began early in the morning, according to one source, and did not affect the neighboring Amuay refinery, which can process 645,000 barrels per day.
Pdvsa is moving equipment between the two facilities to restore power as soon as possible, according to the second source.
Government’s Plans for Fuel Price Increase
Amidst the power outage, the Venezuelan government is preparing for a 50% increase in fuel prices at gas stations, anticipating reduced income due to Chevron and other oil companies ceasing operations in the country.
Pdvsa plans to implement a price hike of 0.25 USD per liter to 0.75 USD across all states, according to three sources aware of the situation.
Government officials have already communicated the planned price increase to private operators in some states, though it has not been implemented yet. Once officially announced and published in the official bulletin, the new prices are expected to appear at gas stations. Social media has already begun circulating images of the new prices.
The initial price hikes occurred in 2020, reversing a decades-long policy of price freezes.
Key Questions and Answers
- What is the Cardón refinery and why is it significant? The Cardón refinery, owned by Pdvsa, is Venezuela’s second-largest with a daily capacity of 310,000 barrels. It has been crucial in processing raw materials for projects in the Orinoco Belt.
- Why was the Cardón refinery shut down? The refinery was halted due to a power outage that began early in the morning.
- How will this power outage affect Venezuela’s refining sector? The refining sector has faced frequent disruptions due to insufficient investment, poor management, and U.S. sanctions. The Cardón refinery’s shutdown may exacerbate these challenges.
- What is the Venezuelan government planning regarding fuel prices? The government intends to increase fuel prices by 0.25 USD per liter, raising the price to 0.75 USD across all states, anticipating reduced income due to oil companies ceasing operations.
- When will the fuel price increase be implemented? The price hike has not been officially announced or published in the official bulletin. It will be implemented once these steps are completed.
