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Strategic Associations in Venezuela
- By Oil and Gas Author
- Published 09/4/2006
- Crude Oil Petroleum , Natural Gas Petroleum , Exploration and Discoveries , Liquefied Natural Gas LNG , Environment and Pollution , Petroleum Pipeline
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View all articles by Oil and Gas AuthorOrimulsion® is a patented product developed by PdVSA for use as a boiler fuel. PdVSA markets Orimulsion as an alternative to Coal or fuel Oil, especially in power plants. It is a mixture of approximately 70 percent natural bitumen, 30 percent water, and less than 1 percent surfactants (emulsifiers). Bitumen is a non-oil hydrocarbon and not counted towards Venezuelas OPEC Crude Oil production quota. There is a single Orimulsion plant in Cerro Negro, with a capacity of 5.2 million metric tons per year (mt/y). The future of Orimulsion production, however, is unclear. Production is currently 40,000 bbl/d down from a peak of 100,000 bbl/d. In April 2005, PdVSA announced that it would cease Orimulsion production within twelve months. The company claims that, due to prevailing high oil prices, it is more profitable to sell its heavy and extra-Heavy Crude varieties as upgraded syncrude or blended crude oil. PdVSA stated that it would continue to produce Orimulsion only until it had met its contractual obligations. The decision to stop Orimulsion production has not been without controversy. In August 2005, Canadas New Brunswick (NB) Power filed a $1.6 billion suit against PdVSA, alleging that the company had broken a supply commitment to NB Powers Coleson Cover power plant. NB Power conceded that PdVSA never actually signed the agreement, but that PdVSA signaled its intent to supply Orimulsion to the company. An international arbitration panel agreed to hear a case against PdVSA brought by Italys Enel, in which the company claims $200 million in damages due to the lost Orimulsion supply. Despite PdVSA statements that it would cease Orimulsion production, the company announced that it would go ahead with a plan to bring a 6.5 million mt/y Orimulsion plant online in a joint venture with CNPC. The project, dubbed Sinovensa, will supply Orimulsion to power plants in China. CNPC planned to complete the construction of two, 600-megawatt power plants in Zhanjiang by the end of 2006 that will consume 1.8 million mt/y of Orimulsion from the Sinovensa project.
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Strategic Associations in Venezuela
