Venezuela to Lower Orimulsion Exports to China

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Researched by Industrial Info Resources (Sugar Land, Texas). In 2001, BITOR, Bitúmenes Orinoco S.A (Caracas, Venezuela), China National Petroleum Corporation (Beijing, China), and Petrochina Fuel (Beijing, China) began a $330 billion joint venture to start the Orifuel Sinovensa company to manufacture orimulsion fuel. At the beginning of April, after a visit to China, PDVSA’s representatives determined that China will receive less orimulsion than originally stipulated. China owns 70% of the company, while Venezuela owns the remaining 30%.

BITOR, a PDVSA subsidiary, is responsible for the development, production, and international marketing of its brand fuel orimulsion, a new generation boiler fuel designed mainly for power generation and other industrial uses such as a replacement for coal. Orimulsion is a bitumen-in-water emulsion comprising 70% natural bitumen (from the Orinoco region of North Eastern Venezuela) dispersed in fresh water. It is manufactured in Venezuela and transported in double-hulled vessels to customers for use as a power station fuel or in the heavy industry sector.

New Plant in Zhanjiang, China

PetroChina (Beijing, China) is expected to get the first orimulsion cargo in May 2006 from the new plant in Venezuela. The Zhanjiang port provides a favorable environment for landing and importing the supply of orimulsion oil, especially due to it’s 300,000 ton oil wharf. Most of the imported fuel will be used to feed a 1,200 MW Power plant (Zhanjiang). Construction of the power plant began in November 2003, and it went into operation last March. The new power plant will use between 2 and 2.5 million tons of orimulsion per year.

According to Petrochina, since the plant was designed to make use of orimulsion, it should be supplied through the Venezuelan based joint venture company, in which China Natural Petroleum Corporation (Beijing, China) and Petrochina Fuel Oil Company (Beijing, China) jointly have a 70% interest. If PetroChina is not capable of getting the needed amount of orimulsion it will be forced to depend on other more expensive supplies to generate energy. Nevertheless, As a precaution, Petrochina is storing 350,000 tons of extra heavy crude to operate the power plant.

A group of PDVAS’s representatives was in Pekin during the first week of April and met with PetroChina’s authorities to decide on the distribution of the production, which started this month in the Orinoco Belt region of Venezuela. It was announced that China would get less fuel than what was originally arranged when the agreement was signed. China originally expected a total of 6.5 million tons of production per year that would result from the plant; instead, it will receive only two-thirds of the total production.

Even though, this new project has not been carried out as it was originally stipulated and China will see its interests affected by the reduction on orimulsion exports, it gives Venezuela a preeminent position in the world, since it is the only orimulsion producer. It also follows the Venezuelan president’s aims to create a bigger and more diversified market for Venezuela and to become more independent from the existing markets.

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