Iranian expertise is expected to help Venezuela break away from its dependence on US refining technology.
By Venezuelanalysis – José Luis Granados Ceja
Feb 7, 2023
Venezuela and Irán will rehabilitate the South American nation’s largest refining complex, opening a pathway to ending dependency on US technology.
News of the plan to revamp the Paraguaná Refining Complex comes on the heels of a visit by Iranian Foreign Minister Hossein Amir-Abdollahian where he met directly with Venezuelan President Nicolás Maduro, Vice-President Delcy Rodriguez and Oil Minister Tareck El Aissami.
Maduro welcomed Amir-Abdollahian inside the Miraflores Presidential Palace on Friday, calling the visit “productive”.
“I am confident that our relations will continue to strengthen for technological, industrial, scientific and cultural exchange that benefits both peoples,” wrote Maduro on his Twitter account following the meeting.
Venezuela and Irán enjoy close political, economic, and diplomatic relations, which have been further strengthened as a result of increased interference by Washington and the imposition of punishing sanctions regimes on both countries.
The 100-day plan to rehabilitate the Paraguaná Refining Complex, first reported by Reuters, will see state-owned firms Petróleos de Venezuela (PDVSA) and National Iranian Oil Refining and Distribution Company (NIORDC) cooperate to increase fuel production at the complex.
The Paraguaná Refining Complex in western Falcón state is the largest in the hemisphere. It is divided into two main refineries, Amuay and Cardón, which have a capacity to process 645,000 and 310,000 barrels of crude per day, respectively.
Following the crash of oil prices and a years-long oil blockade, Venezuela has seen its oil production precipitously drop from a recent high of 2 million barrels per day (bpd) in 2017. The government has been unable to meet its production target of 1.5 to 2 million bpd, stymied by the effects of the US-led sanctions regime on the country.
The US blockade of the Venezuelan oil industry has excluded the country from global energy and financial markets and blocked it from acquiring diluents and key parts for repair work in the country’s Western-designed oil infrastructure. There have been critical gasoline and diesel shortages in recent years.
The US-led blockade imposed on Venezuela further complicates PDVSA’s ability to conduct maintenance and infrastructure work due to a phenomenon known as “overcompliance” whereby firms refuse to do business with Venezuela due to fear of running afoul of strict US sanctions despite not necessarily violating unilateral coercive measures.
NIORDC’s expertise is expected to help PDVSA begin to break away from its dependence on US refinery technology, helping better position the state-owned oil company as it works to meet targets.
In order to bypass the blockade, PDVSA has resorted to intermediary traders and ship-to-ship transfers to allocate its crude in the Asian market. However, the hurdles to evade US sanctions have led to big discounts and payment problems. This eventually led PDVSA to reportedly temporarily suspend oil sales contracts as the country’s output remained stagnant and exports slipped.
The Maduro government has turned to Iran for assistance to jumpstart the oil industry, especially the refining sector. Since 2020, Tehran has helped Venezuela meet its fuel needs by sending several gasoline cargoes as well as diluents, equipment, materials and technicians to restart operations. In June of last year, President Maduro and his Iranian counterpart Ibrahim Raisi signed a 20-year deal to expand cooperation, including repair works in the country’s refineries.
Amir-Abdollahian’s visit to Caracas came as part of a short tour of the region, where he also visited with high level officials in Cuba and Nicaragua.
During his visit with his Cuban counterpart, Amir-Abdollahian criticized the US’ unilateral coercive measures, which Cuba has been subject to for decades.
“The United States’ approach of imposing unilateral sanctions on other countries and bullying are certain to fail,” said Amir-Abdollahian.
Read More: Venezuelanalysis – Venezuela and Irán to Revamp Massive Oil Complex After Visit by FM