Refinery problems halt Venezuela oil flow

Industry sources see no need to worry By Andrew Richards
Stabroek News
April 12, 2002

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Besieged by a strike, Venezuela's state-owned oil company Petroleos de Venezuela (PDVSA) has declared force majeure on oil shipments to Guyana, prompting Prime Minister Sam Hinds to urge careful use and conservation. (See other story on page four.)

But players in the local sector yesterday asserted that there was no need to be alarmed since imports could be sourced from other suppliers and Guyana has storage capacity.

The Government Information Agency (GINA) quoted Hinds as saying: "We don't have any reason to expect that it will happen, but we have to consider and contemplate that it may a possibility."

Energy coordinator of the Guyana Energy Authority (GEA), Joseph O'Lall received a fax on Wednesday from PDVSA which informed on the company's course of action.

The Prime Minister was immediately informed, together with fuel importers.

PDVSA notified the Guyana government that there was a total power failure on April 3 and several explosions at its Isla refinery in Curacao from which the company supplies Guyana with fuel. The company has also been hit by industrial unrest.

"There is absolutely nothing to be worried about. We have been working on alternative arrangements if the situation prolonged at PDVSA but we don't see it going that way," O'Lall stated when contacted yesterday.

Guyana Oil Company's (GUYOIL) marketing manager, Alwyn Appiah, told Stabroek News yesterday that his company will have its full complement of fuel by this weekend when its fuel boat arrived.

He remarked that the public should not be too concerned about the situation since alternative arrangements for fuel could be made outside the Venezuela agreement.

Appiah noted that already Guyana was in an arrangement where it purchased some petroleum products from Trinidad and Tobago.

For example, Guyana Power and Light Co required a special grade of Bunker C fuel for its plants and this was sourced from the twin-island republic.

"If the problem persisted at PDVSA we could always contact Petrotrin in Trinidad," the GUYOIL official stated.

He also pointed out that multinational companies like Shell and Texaco which have operations here had the option to call up their principals and request supplies in whatever quantity they desire.

"It's not a matter for grave concern," Appiah assured. "If need be we could certainly use alternative sources."

The prices for fuel at the pumps have risen but Appiah said this occurred even before the PDVSA crisis due to the cutback in supplies by producers.

Hinds convened a meeting on Wednesday at the GEA to discuss the situation, at which fuel importers were present.

In a press release issued by the Office of the Prime Minister (OPM) yesterday, it was stated that the current stocks together with supplies to be sourced from Trinidad and Tobago and Suriname would maintain normal fuel availability until the end of May.

OPM expressed hope that the force majeure (excusing one from fulfilling a contract because of an unforeseen event) would be lifted by that time.

Fuel importers noted that the world price for fuel increased by 38% over the last six weeks.

This was influenced by the Middle East situation, and the reduction of supply from Iraq, Libya, and Iran, and the unrest being faced by the Venezuelan industry.

Replacement purchases from Trinidad and Tobago and elsewhere could cost about 10% more than regular purchases from PDVSA, OPM stated.

"Prime Minister takes this occasion of tensions in oil producing and exporting countries (causing large rises in the price of fuels and threatening tightness in availability) to urge each and everyone to return to conservation measures of the 1970s and 1980s," the release said.

A meeting is scheduled for Monday to review the situation and revisions would continue as warranted.

Guyana's oil arrangement with Venezuela commenced as a barter arrangement in exchange for Guyana's bauxite. It is anticipated that Guyana would soon be accessing petroleum initially on a credit basis from Venezuela.

This is following the signing of the Caracas Energy Accord by President Bharrat Jagdeo with the Venezuelan government.

Hinds said the paperwork for this initiative was being finalised by the Ministry of Foreign Trade and International Cooperation.

Venezuela is Guyana's largest supplier of fuel.