Both Nicorsa-Cafim Consortium, of Korea, and Enel, of Italy, have expressed before the Venezuelan government (independently from each other, and with several weeks of difference), their interest in the orimulsion production module, the only one under operation and 100% property of Petróleos de Venezuela (Pdvsa).

In a letter addressed to the general manager of the Pdvsa eastern Venezuela division, and head of Bitúmenes del Orinoco (Bitor), Nelson Martínez, the European firm says:

“We refer to the current critical situation of the orimulsion business, which is critically affecting investments and obligations already assumed by Enel. ...we would like to express our serious concern in relation to recent news about Pdvsa’s granting China the option of buying the existing orimulsion plant.

If such information is accurate, the possibility of achieving a positive outcome in our situation would be seriously affected. Thus, if Pdvsa is willing to sell its plant, we are prepared to consider this option above all other alternatives that could enable us to find a positive solution to our need for supply of orimulsion to our plants.

Hoping that Pdvsa will study this matter carefully, and taking into consideration the critical current situation, we will refrain from making any decision that might jeopardize the possibilities of a Pdvsa-Enel agreement. A prompt answer will be dearly appreciated.”

Meanwhile, the Korean firm indicated in its letter that “in the past, ICC has worked with Bitor in a joint venture for the construction of a new orimulsion module for the Korean market.

On August 18th 2003, both companies signed an agreement memorandum in order to achieve this purpose. Nevertheless, due to the new governmental policy concerning the orimulsion business, the whole project was halted. However, we are still interested in integrating joint ventures.

...we have read in the Venezuelan press that the Ministry of Energy and Mining has instructed Pdvsa to sell the orimulsion module.
We would hereby like to express our interest in the purchase of the facilities that have been offered. With this purpose, we would like to propose the reactivation of the joint venture project, in abidance by the terms established in the agreement memorandum signed last year, and adjust it to the current conditions in the bituminous market.

We are very confident in reaching an agreement that is mutually satisfactory both for the government’s price requirements and for the development of a space in the market of the Korean electricity sector, where orimulsion will continue to be competitive. We appreciate any consideration you may have regarding this proposal, and are in hope of receiving prompt reply,”

Sources from the oil sector have indicated that the MEM offered to China Petroleum Corporation(CPC) the administration of the operations in the only existing orimulsion plant in Venezuela.

Pdvsa officials have explained that their institution ratified its willingness to accept the decision that the Chinese state owned corporation -with which Pdvsa is also discussing details related to the development of a second orimulsion production module- may take.

This unit, originally planned to be built in the Jose industrial complex, north of Anzoátegui state(in eastern Venezuela), will be built south of the neighboring Monagas state. “They will decide what is commercially more convenient. If we negotiate our complex in Morichal with them, they would not have to construct anything.”, said the source.

Sinovensa, a CPC-Pdvsa merger, with 30% Pdvsa capital, is in charge of the second orimulsion module construction project. The change of site for the module would cost the Chinese company nearly 100 million U$ above the 350 million originally estimated for this project.
The struggle between the MEM and CPC has been going on for several months. According to some informers, discussions have reached the point of considering an immediate halt of the negotiations.

The existing orimulsion module pumps nearly 6.0 million tons of orimulsion towards some Asian and European markets.

For its part, Sinovensa has planned to produce 6.5 million tons of orimulsion per year, a substitute of coal in the production of electric energy. This unit was expected to produce 125,000 barrels per day for the electricity generation market in the first semester of 2004.

Published in Quantum No 30

Rodrigo Morazán