Venezuela’s second-largest oil refinery, which has a capacity of 310,000 barrels per day, halted activities after an explosion and fire.

“An explosion at Venezuela’s second-largest oil refinery has caused it to suspend activities. Reuters reports that the fire at the Cardon facility in Punto Fijo, Falcón state, started in a gas line,” Al Jazeera reports.

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Reuters has more:

Eight sources with knowledge ​of the matter earlier confirmed to Reuters that a ​fire had broken out at the facility, part ⁠of PDVSA’s 955,000-bpd Paraguana Refining Center, Venezuela’s largest complex.

Two of ​the sources said the fire started at a gas line to ​the refinery’s diesel hydrotreater, forcing the shutdown of the entire facility, including boilers.

In its evening statement, PDVSA said it quickly contained the blaze caused ​by a rupture at about 3:25 p.m. in the ​natural gas line feeding the boilers. There were no injuries or major damage, ‌it ⁠added, and the incident is being investigated.

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Fires, power interruptions and outages are common at the company’s facilities, and can affect supply of fuel essential to the domestic market, such as ​gasoline and diesel.

Huge ​columns of flames ⁠and smoke billowed from the refinery in videos posted on social media. Later photographs from ​neighbors showed firefighters in the facility and the ​flames ⁠put out.

In August, the White House announced an oil deal that “secured U.S. majority control of more than 65 billion barrels of proven oil reserves in Venezuela.”

“In connection with this agreement, the Venezuelan interim authorities have granted North American Blue Energy Partners (NABEP), a privately held oil company that is the second-largest private Venezuelan oil producer and a proven operator, 100-year concessions for 17 oil fields with proven reserves of approximately 65 billion barrels,” the White House stated.

“At no cost to the American taxpayer, NABEP has granted the U.S. Department of War’s Office of Strategic Capital a 35% equity stake in its corporate parent, representing up to hundreds of billions in value and dividends for the United States,” it added.

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On top of the Pentagon equity stake, the State Department has the right to purchase 20% of NABEP’s oil output at the cost of production rather than market price. The U.S. agency also has the right to first refusal for the remaining 80% of NABEP’s production.

The U.S. government can also veto appointments to NABEP’s board of directors and a majority of the board must be U.S. citizens. The deal with NABEP is governed by U.S. law and subject to the jurisdiction of its courts.

“This is straight up a state-owned enterprise,” said Scott Lincicome, an international trade law expert at the Cato Institute. “De facto control of 100% of output at cost — that’s ownership.”

The oil bought by the U.S. on favorable terms will help refill the Strategic Petroleum Reserve and “provide supply for military and other sensitive uses,” the White House has said.

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The Trump administration does not anticipate using the U.S. right of first refusal to the other 80% of NABEP’s production, a U.S. official told reporters on a call Tuesday.

The first refusal right is a long-term insurance policy that the U.S. would use when it faces a crisis, said the official, who spoke on the condition of anonymity to discuss the deal freely.

The deal is “first and foremost about geopolitics,” the official said. “This was an opportunity to secure fields that had largely been under the influence of Chinese and Russian companies.”

 

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