MARIANNA PÁRRAGA
EL UNIVERSAL

While Venezuela plans to build three oil refineries from scratch, the works have not started. It is therefore noteworthy wondering how long local refining facilities will meet the booming fuel demand in the country.

Based on yearbook Oil and Other Statistical Data (PODE), published by the Ministry of Energy and Petroleum, domestic consumption of fuel climbed from 185.800 bpd in 1996 to a peak of 243,300 bpd in 2002. Fuel domestic production, however, did not record the same hike.

Specifically, fuel production decreased from 322,340 bpd in 2000 to 281,120 bpd in 2004 -a decline of 12.8 percent parallel to the period when domestic demand started to soar. The data provided for 2005-2007 -precisely the period when car sales have skyrocketed- are not concise. However, one could reasonably expect a further reduction in the production of light oil byproducts such as gasoline over the last two years, as domestic refineries are primarily processing heavy crude oils.

In 2000-2004 Venezuelan production of oil byproducts tumbled 57,000 bpd, with fuels recording the largest decline at 41,220 bpd. Consumption of unleaded gasoline increased in the domestic market, but production of reformulated gasoline (mostly for export) tumbled 55 percent and fuel production for domestic consumption dropped 17%.

Meanwhile, the production of residuals, with a lower price, remained unchanged, with production of sub-products -coke, sulfur, and paraffin- growing 19 percent, mostly likely as a result of expanded operations at the Orinoco Oil Belt.

A bleak outlook
When comparing production versus consumption, bulletin Análisis Venezuela forecasts that ending this year Venezuela will only have 30,000 bpd of fuel available for exports, as consumption in the domestic market amounts to some 315,000 bpd.

This figure matches the trend shown in PODE, according to which fuel surplus for export declined from 112,710 bpd in 2000 to 78,450 bpd in 2004. Further, peaking domestic demand in 2002 reduced the fuel surplus for export to 47,700 bpd that year.

"We are forecasting that gasoline consumption is climbing 1.5 percent per each percentage point increase in Gross Domestic Product."

Abelardo Daza, author of Análisis Venezuela, explained that such estimation is based on an expected 8 percent growth of GDP this year, together with increased car sales.

"Provided that in 2008 the number of cars sold is similar to that expected to be sold this year, Venezuela will not have surplus fuel production for export, and the country will be faced with the risk of resorting to imports."

Análisis Venezuela also estimated that if any domestic refinery faced operational problems cutting production by 10 percent, Pdvsa would be forced to import gasoline components or finished fuels.

"Venezuela is very likely to start importing gasoline temporarily within one year at most, unless technical flexibility allows the industry to replace production of other byproducts with production of gasoline, fuel price changes in the domestic market or domestic new car sales slow down," the bulletin concluded.

Short-term solutions to cope with the problem are scarce, considering that building oil refineries from scratch is taking at least three years and that the process to change refining patterns in domestic facilities is moving forward slowly.

Translated by Maryflor Suárez R.
msuarez@eluniversal.com