The National Iranian Oil Refining and Distribution Company (NIORDC) and state-owned Petróleos de Venezuela (PDVSA) will soon start to revamp the Paraguaná Refining Center (CRP), Venezuela’s largest refining complex, to restore its fuel production capacity, Reuters reported February 3.
NIORDC and PDVSA are expected to sign a $460 million agreement to modernize the CRP, which has a capacity of 955,000 barrels per day. The CRP consists of the Cardón and Amuay refineries.
“The Venezuelan disaster in the oil world is enormous. The country has a very weakened and deteriorated petrochemical industry,” Félix Arellano, international relations expert and professor at the Central University of Venezuela, told Diálogo on February 20. “Venezuela is a dark spot; it’s an ideologically aggressive country.”
The refining center modernization project will allow NIORDC to negotiate with contractors and subcontract work to repair five of the complex’s nine distillation units primarily meant for crude oil refining.
Tehran will be in charge of the procurement, installation, and inspection of parts and units before returning refinery operations to PDVSA, Reuters reported. The planned refurbishment of the distillation units will have Chinese and Iranian parts and equipment in what was originally built with U.S. technology.
Venezuela, however, will not be able to carry out modifications and replacement of parts in the distillation units without considering the need to have the chemical products that the plants require, which are manufactured in the United States, said chemical engineer and former CRP manager Emilio Herrera to Venezuelan news site El Pitazo.
“In addition to the repairs that the Iranians will make, reestablishing diplomatic relations with who was our main client [the U.S.] in order to have those products is a must,” Herrera said. “One thing is to repair machines, and another are the substances used for their operation.”
In recent years, Iran has expanded its role in Venezuela, sending multiple oil tankers to the country to cope with the lack of gasoline in defiance of U.S. sanctions, the University of Navarra’s Center for Global Affairs and Strategic Studies in Spain, indicated in a report. “Maduro has turned to gold to pay for Tehran’s services,” it added.
Oil production plummeted under the Nicolás Maduro regime. While the regime blames it on the economic sanctions, official figures indicate a gradual drop in production long before the U.S. announced measures between 2019 and 2020, Voice of America reported.
“The relationship between Tehran and Caracas is more active, with much more opacity,” Arellano said. “Even without the sanctions, technical support would also have been necessary due to inefficiency, incapacity, and the ideological vision that privileged the loyalists, weakening the industry.”
In recent months Iranian technicians have inspected the refineries several times to prepare for the arrival of at least 400 Iranian workers, who will work with some 1,000 to 1,500 local employees and contractors, Reuters reported.
“For Iran, Russia, and China Venezuela is a token that does not add much in the geopolitical game, but neither does it bring higher costs. It allows Tehran a small element of expansion in a territory very close to the United States,” Arellano said. “Having a bridge country, an ally, that supports, covers up, and is useful for shady business, is not a loss if in exchange you have a banner, a spearhead in Latin America for ideological discourse. Venezuela is fundamentally an ideological token.”
As part of the close relationship between the two countries, Caracas will contract an Iranian shipyard to build two oil tankers to expand its own fleet. The tankers will cost $67.5 million, Reuters reported.
Third parties will operate the tankers to move crude oil amid sanctions that prevent the state-owned company from securing the seaworthy classifications and insurance to sail in international waters. PDVSA has an aging fleet of some 30 tankers that remain in jurisdictional waters due to lack of repairs, Miami-based daily Panam Post reported.
“We are facing a dangerous and delicate scenario for the Latin American region,” Arellano said. “Venezuela is associated with aggressive, authoritarian, militaristic, expansionist governments, because both Iran and Russia show all this disposition; they promote hybrid war but also hot war when they need it,” he said.
“In order to maintain peace and security in the region we must highlight the importance, the benefit, and the need to defend liberal values, freedoms, and human rights,” Arellano concluded.