Venezuela Turns to Iran to Revive Oil Production

Venezuela Turns to Iran to Revive Oil Production

By Diálogo
June 12, 2020

Amid nationwide gasoline shortages that have prompted fuel rationing and protests at gas stations, Venezuela has turned to Iran for help reviving its ailing oil industry.

In late May, four of five Iranian tankers carrying fuel to Venezuela arrived to the South American country and docked at ports serving its refineries, defying U.S. sanctions on both countries. The fifth tanker arrived on June 1. Francisco J. Monaldi, a Venezuelan oil expert at Rice University in Houston, told The New York Times that together the ships carry an estimated 1.5 million barrels of fuel, enough to supply the nation for a few weeks to a month.

In another move, the Islamic Republic has been delivering components used for the production of gasoline and is also supplying workers and equipment for oil refining by air, oil industry experts say.

About 16 flights from Iranian state-owned Mahan Air, which is under U.S. sanctions, have landed in Venezuela since April 22, despite the Latin American country’s flights suspensions over coronavirus concerns, various news networks reported, including Bloomberg, Reuters, and Venezuelan online news portal El Pitazo. On April 23, in a tweet that has since been deleted, the regime’s Refining and Petrochemical Vice Minister Erling Rojas thanked Iran for flying-in the needed chemical catalyst to restart the country’s refineries. Rojas was removed from duty the same day.

According to Bloomberg, the flights have returned to Tehran with some 9 tons of gold, valued at more than $500 million, as payment for Iran’s help, which critics see as an attempt by the Nicolás Maduro regime to bypass U.S. sanctions. Gustavo Marcano, senior aide to Venezuelan Interim President Juan Guaidó’s envoy to Washington, said the flights were “part of Maduro’s narcoterrorist operations.”

On April 29, U.S. Secretary of State Mike Pompeo urged countries to deny fly over rights to Mahan Air, which he said has “transferred unknown support to the Maduro regime.”

“This is the same terrorist airline that Iran used to move weapons and fighters around the Middle East,” Pompeo said, calling for the flights to “stop.” The U.S. Department of the Treasury sanctioned Mahan Air in 2011 for smuggling weapons on behalf of the Islamic Revolutionary Guards Corps-Quds Force, and again in 2019 for the airline’s alleged role in the proliferation of weapons of mass destruction.

Venezuela’s National Institute of Civil Aviation (INAC, in Spanish) has authorized Mahan Air to make up to 20 direct flights from Tehran to the Paraguaná Peninsula, on the country’s Caribbean coast, while additional flights will be approved “as needed” as long as flights restrictions remain in place, an INAC official told London-based Argus Media, a company that produces intelligence reports on the crude oil industry.

Argus Media reported that the aid was the result of an Iran-Venezuela cooperation deal brokered by the regime’s new Oil Minister Tareck El Aissami, which included the delivery of key chemical catalysts, compressors, refinery parts, and workers to help restart the Amuay and Punta Cardón refineries within the Paraguaná Refining Center (CRP, in Spanish), the largest in the country. Venezuela state-owned oil company PDVSA shut down both facilities, the last two operating refineries in the country, in late January.

A Venezuelan oil technician based at the Punta Cardón facility, who asked to remain anonymous for security reasons, told Diálogo that efforts at the refinery were ongoing to restart operations. “I work in the steam and water systems with our Iranian allies. We desalinize sea water, salt water to use in generating steam to power certain units,” the technician said. “They tell us it will be at least another four months until we can produce gasoline again.”

The Venezuelan National Assembly has warned about the strengthening alliance between the Maduro regime and Tehran. In an April 27 tweet, lawmaker Julio Borges said that the flights are aimed at “increasing the presence of Iranian officials and groups in Venezuela” and are “a danger to the peace and security of the region.”

Evan Ellis, a research professor of Latin American Studies at the U.S. Army War College’s Strategic Studies Institute, doesn’t believe the Iranian involvement will revive the crippling oil industry. “The use of the sanctioned airline is a minor affair. It will not make a significant impact on the Maduro regime’s gasoline shortage. Nor does it appear to be evidence of a substantially new level of cooperation between Iran and the regime,” Ellis told Diálogo. “The Mahan flights are another instance of low-level cooperation between outlawed regimes.”

Despite the incoming support from Iran, CRP officials told Argus Media they doubted that PDVSA could restart oil production in the near term. “The CRP is engineered to operate as an integrated unit, which means all of its processing units must be operational to assure safe and sustained fuel production,” a senior official told Argus Media.