Wildfires Pose Heightened Risk to Venezuelan Crude Output

By Mircely Guanipa and Luc Cohen | May 1, 2020

Wildfires during Venezuela’s dry season are posing heightened risk to crude output this year due to lack of maintenance in state-owned oil company’s PDVSA’s oilfields and fuel shortages leaving firefighters without fuel, according to interviews with a half-dozen workers and other industry sources.

The fires come as Venezuela’s crude output has already fallen by 20% so far this year to around 700,000 barrels per day (bpd), its lowest level in decades, due to years of underinvestment, U.S. sanctions on cash-strapped PDVSA, and more recently the collapse in crude prices as demand falls due to the coronavirus pandemic.

At least three forest fires reached oil infrastructure in the Orinoco extra-heavy oil belt in eastern Venezuela, one of the world’s largest crude deposits, during the month of April, according to incident reports seen by Reuters and the sources, some of whom spoke on condition of anonymity for fear of retribution.

Wildfires are common in Venezuela’s eastern plains in the dry season in the first half of the year. Most key infrastructure have firebreaks intended to halt the flames, and PDVSA units have their own teams of firefighters.

But with PDVSA short on resources, several workers said the company has not trimmed scrubs in recent years as much as it used to, and that small puddles of spilled crude around pumping stations and storage tanks have gone uncleaned, adding to the fire risk.

“Vegetation fires are seasonal, but what is happening now is they have not done maintenance around the installations,” said Guillermo Morillo, an oil consultant and former PDVSA manager in eastern Monagas state, where several of the fires have occurred.

The most severe incident so far took place at PDVSA’s Morichal operating center earlier this week, which began when a spark from a welding shop in the plant set the outside vegetation on fire on Sunday, according to two people familiar with the matter.

The fire took more than 24 hours to put out, disrupting crude output at the Petrocarabobo and Petroindependencia fields, which together produced some 26,000 bpd in March, according to PDVSA figures.

PDVSA did not immediately respond to requests for comment.

The other fires affecting infrastructure in the Orinoco belt took place on April 11 at the 6,000 bpd Petrocedeno field and the PDVSA’s 57,000 bpd Morichal field. Those incidents did not affect output.

“These fires never used to hit the stations before because they did the necessary maintenance,” said one PDVSA Morichal worker.

The response has been hampered by an acute fuel shortage across Venezuela, the result of the near-total collapse of the country’s 1.3 million bpd refining network and U.S. sanctions complicating fuel imports.

“There’s not even gasoline for people to get in their cars to get to the fire trucks,” said Igor Miranda, president of the Monagas chapter of the Oil Chamber of private oilfield services company, adding that his company has provided water and equipment to help PDVSA to put out fires this year.

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