VENEZUELA - The Local Refineries & Marketing Operations.

There are six oil refineries in Venezuela, all owned and run by PDVSA which has the lion's share of the domestic market.

As a result of a restructuring process in late 1997, PDVSA had from early 1998 to the first quarter of 1999 made major savings in its domestic refineries and marketing operations (see background in Vols. 57 and 61). PDVSA's 20-year supply monopoly ended in 1997 when Congress passed a law allowing foreign companies and private Venezuelan firms to market oil products in the country. BP, Mobil (now part of ExxonMobil), Shell, Texaco (now part of Chevron) and other majors joined the country's oil retail market, together with Venezuelan firms. But the governments then and under Chavez have retained the pricing of domestic petroleum products.

The situation took a negative turn for PDVSA's competitors with the coming to office of President Chavez in February 1999. The foreign companies have since limited their retail operations, worried that the Chavez government will keep the local oil market regulated and fuel prices heavily subsidised. Prices of natural gas being supplied to the domestic market are also heavily subsidised, with PDVSA paying the producers, Repsol/YPF and a consortium led by Total, 80% above the local gas price.

Apart from the upgrades at the Amuay, Cardon and Puerto La Cruz refineries, two expansions completed in 1996 were the following: the inter-connection of the Amuay and Cardon plants, both located on the Paraguana peninsula in the state of Falcon; and the setting up of a catalytic distillation unit at El Palito refinery, with technology developed by PDVSA's research unit Intevep.

The linkage of Amuay and Cardon was done to optimise the product mix at both complexes, in order to produce higher quality fuels and chemicals and generate added revenues of $80m/year. The El Palito expansion boosted production of methyl-tertiary-butyl-ether (MTBE), ter-amyl-methyl-ether (TAME) and high octane components needed to reformulate gasolines for export.

Due to plans to phase out MTBE in the US, Super Octanos in late 2000 began considering a shift of its 500,000 t/y of MTBE production to iso-octane, another gasoline additive.

Deltaven is PDVSA's local oil marketing subsidiary. Set up in July 1996, Deltaven was created in order to modernise the image of state retailing. Until the latest restructuring process, Deltaven unified the domestic marketing strategies of the then integrated PDVSA operators Lagoven, Maraven and Corpoven. These three companies were merged into PDVSA's new system in late 1998.