Venezuela oil refinery fire burns for third straight day

Aug 27, 2012

A fire burned for a third day in two fuel storage tanks at Venezuela's biggest refinery on Monday, putting in doubt plans to restart the facility quickly after one of the world's deadliest oil industry accidents in recent history.

Energy Minister Rafael Ramirez said the blaze remained contained to the storage tanks. He has insisted that the Amuay refinery can be restarted within two days, once the flames have been put out.

"In the coming hours we are going to extinguish those tanks," Ramirez told state TV, standing alongside a aerial photograph of the sprawling facility.

A gas leak caused an explosion and then a fire before dawn on Saturday at the 645,000 barrel-per-day facility, part of the world's second biggest refinery complex. Nearby homes were destroyed were obliterated, at least 41 people killed and dozens more wounded.

State oil company PDVSA said none of Amuay's production units was affected and that Venezuela has enough stocks to meet its commitments to the domestic market and keep up exports.

President Hugo Chavez promised a full investigation into the tragedy during an emotional visit to the scene on Sunday.

The incident is likely to support global fuel prices that already are being pushed higher by worries that Tropical Storm Isaac could suspend U.S. oil production and hints of another round of monetary stimulus by the U.S. Federal Reserve.

Ivan Freites, a union leader at the Paraguana complex, told Reuters it was not possible for the refinery to restart within two days of the blast, and he was sharply critical of officials who he accused of playing down the scale of the disaster.

"A refinery is not a coffee-maker," he said. "They don't understand the restart process. The managers are acting like political operatives ... not thinking of the victim's families."

Freites' union has been pushing PDVSA to improve safety standards at its installations, especially since 2010 when 95 workers were rescued from an exploration platform that sank in the Caribbean.

PDVSA said on Sunday it would try to extinguish one of the burning tanks by spraying it with foam. If that failed, officials said, they would wait for the fire to burn out on its own, which could take two to three days.

Ramirez told Reuters that PDVSA is considering seeking floating storage in the area - using tankers to store oil and refined fuel offshore while the company repairs the main tanks.

Tony Nunan, a risk manager at Mitsubishi Corp in Tokyo, said the incident was expected to have an impact on markets.

"Oil product prices are expected to go up after the fire as they might likely look towards imports," he said.

One Singapore-based trader said prices had risen. "This is super bullish news for gasoline," the trader said.

Saturday's blast ranks as one of the most deadly oil industry accidents in recent history, nearing the toll of the 1997 fire at India's Visakhapatnam refinery that killed 56, and topping the 2005 Texas City refinery blast in the United States, which killed 15.

Reuters

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