A large fire has occurred at the Cardón refinery, the second largest refinery in Venezuela, which led to the cessation of the entire facility's operations. This incident was caused by an explosion in a gas pipeline connected to the diesel hydrotreater unit. Following the incident, refinery staff were immediately evacuated, and reports indicate that the fire has been brought under control.
Incident Details
The Cardón refinery is part of the Paraguana refining complex, which has a daily production capacity of 955,000 barrels of oil. This refinery is recognized as the main fuel supplier for Venezuela. While Venezuela is currently exporting crude oil more than at any time in the past seven years, with exports increasing to about 1.2 million barrels per day since January, infrastructure and technical issues have prevented the refineries from continuing their operations.
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Challenges in Venezuela's Refining Industry
One of the main challenges facing Venezuela's refining industry relates to the destination of oil barrels and the control of oil sales revenues by the United States. Given that crude oil is flowing to foreign buyers, especially Gulf Coast U.S. refineries designed for Venezuela's heavy oil, domestic refineries are facing serious problems. These refineries have experienced operational failures due to a lack of feedstock and spare parts, forcing workers to salvage parts from inactive units for use in other areas.
Analysts estimate that the cost of rebuilding Venezuela's refining industry will reach $20 billion or more, but no one is willing to pay this cost. Existing incentives exacerbate this issue; American refineries want heavy crude oil, and Washington prefers to receive the export revenues it oversees. Meanwhile, foreign companies are more focused on upstream oil and gas projects, leaving the refining sector to fend for itself.
Currently, it is unclear how long the Cardón refinery will remain inactive and whether Venezuela will have to import more fuel to compensate for this shortfall.
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