Venezuela’s Amuay to Return to Full Operations in ‘Days’

Venezuela’s Amuay oil refinery, the country’s largest, will return to full capacity in “days” after restarting some distillation units following a fatal gas explosion on Aug. 25, Oil Minister Rafael Ramirez said.

“We’re in the midst of our safe restart protocol and currently processing 264,000 barrels a day,” Ramirez said today at an oil conference in Puerto La Cruz. “In the next few days we’ll have normalized our operations.”

A gas leak just after midnight on Aug. 25 caused an explosion at Amuay that engulfed homes, businesses and storage tanks in flames, killing 42 people. President Hugo Chavez ordered an investigation into the accident and vowed to replace or repair the more than 1,000 damaged residences near the plant.

Petroleos de Venezuela SA, the state oil company, has resumed three crude distillation units, the Caracas-based company said in an e-mailed statement yesterday. The facilities break down crude into components that can be converted into fuels in other units. Amuay has restored almost a third of its daily crude processing capacity of 645,000 barrels.

“This is an important development taking into account the circumstances surrounding the shutdown of the refinery,” Ramirez, who is also president of PDVSA, as the oil company is known, said in the statement.

Careful Inspection

PDVSA is “carefully inspecting” the main units and lines running to storage tanks that crossed the area of the fires to make sure there isn’t damage before proceeding with a full restart, Ramirez told reporters today at the conference.

The refinery’s main processing units were taken offline as a precaution and were undamaged from the explosion and fires that burned for four days at storage tanks, PDVSA has said. While nine storage tanks were damaged, the company has enough inventory to meet internal and external obligations, it said.

PDVSA has 10 days of fuel inventories as its other refineries make up for Amuay’s reduced output, Ramirez said today. While PDVSA continues to import gasoline components including MTBE because of shortfalls in domestic supplies, the state company doesn’t import finished gasoline, he said.

October-delivery gasoline rose 2.06 cents to $2.9522 a gallon on the New York Mercantile Exchange as U.S. Gulf Coast refineries came back online after Hurricane Isaac, boosting supply. Prices climbed 6.6 percent last month.

‘Huge Relief’

Amuay’s shutdown has tightened the global supply of oil products, Maria van der Hoeven, head of the Paris-based International Energy Agency, told reporters in New Delhi today.

Once Amuay is completely restarted it will be a “huge sigh of relief to the region,” said Phil Flynn, senior market analyst at Price Futures Group in Chicago.

About 1.4 million barrels of refined products including gasoil, jet fuel and fuel oil have been shipped from the Amuay dock since the accident, Ramirez said in the statement.

Amuay forms part of the Paraguana refining complex in the western state of Falcon along with the Cardon and Bajo Grande plants. Paraguana is the second-largest refining complex in the world, according to data compiled by Bloomberg.

In a teleconference to PDVSA workers yesterday Ramirez denied that a lack of maintenance was behind the gas leak and explosion and said that $4.4 billion has been invested in maintaining units at the Paraguana complex since 2007. Amuay was opened in 1950, according to Jesus Luongo, a plant manager.

“We’re assuming our responsibilities, investigating, and fulfilling our duties until we can guarantee a return to normality in our operations,” Ramirez said in a separate statement.

The Amuay blast was among the world’s deadliest at an oil refinery. Fifteen workers were killed at BP Plc (BP/)’s Texas City refinery in 2005 while more than 50 people died in a fire at Hindustan Petroleum Corp.’s refinery in Visakhapatnam, India, in 1997.

To contact the reporters on this story: Daniel Cancel in Caracas at dcancel@bloomberg.net; Nathan Crooks in Caracas at ncrooks@bloomberg.net

To contact the editor responsible for this story: James Attwood at jattwood3@bloomberg.net

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