Iran’s oil sales can return to pre-sanctions levels via Venezuelan refineries
Iran has the potential to rejuvenate its oil exports to Venezuela by refurbishing the Paraguana refinery and boosting its daily oil exports to the country to a total of 860,000 barrels.
Paraguana, Venezuela’s largest refining facility, with a daily capacity of 955,000 barrels, is currently running at about 10% of its total capacity following the closure of two distillation units due to a fire and lack of essential raw materials, according to Fars news agency.
Due to U.S. oil sanctions imposed in 2019, the Venezuelan oil sector has faced technical and engineering limitations, resulting in shutdowns. The situation can provide Iranian engineers with a chance to engage in the revitalization of Venezuela’s oil industry, including the restoration of the Paraguana refinery and Iran’s oil exports.
Over the past two years, Iran’s presence in 17 overseas refineries has been raised. So, it contributes to the revitalization of the partially active extraterritorial refineries by offering technical and engineering services and taking a stake in them. As a result of the revival, the country then exports its own oil in accordance with the increased capacity.
Among the projects, the reconstruction of the 140,000-barrel El-Palito refinery in Venezuela is in its final stages of completion.
Before the arrival of Iranian engineers, the refinery had a mere 10,000 barrels-per-day capacity. From the beginning of the previous Iranian year (started March 21, 2022) a contract valued at €110 million was inked between the National Iranian Engineering Construction Company and the Venezuelan oil firm.
Two years after the contract was signed, the El-Palito refinery is now operating at its full capacity, resulting in a daily oil export volume of 100,000 barrels for Iran. The successful execution of this project offers valuable insights for Iran’s participation in other refinery reconstruction initiatives in Venezuela, such as the Paraguana refinery.
Currently, the Paraguana crude oil refinery complex in Venezuela, consisting of Cardon refinery, Amuay refinery, and Grande refinery, is running at less than 10% of its potential capacity due to a shortage of technical equipment. By renovating and restoring 90% of this complex’s capacity, equivalent to over 860,000 barrels of oil, Iran could have the capability to export roughly one million barrels of its own oil to Venezuela every day.
Presently, Iran is exporting around 1.2 million barrels, out of its total oil export capacity of 2.2 million barrels, to China. By reviving the Paraguana refinery and increasing Iran’s current oil exports to Venezuela by 860,000 barrels, it will raise Iran’s total oil exports by approximately one million barrels.
Iran’s daily average oil exports to China during the first 10 months of 2023 have reached 1.235 million barrels, marking an 84% increase compared to the same period last year, according to Kpler.