Venezuelan military partner seeks coke investors

OREANDA-NEWS. July 14, 2016. Pacific Rim Energy (PRE) is seeking partners to help it market oil, gas and mining assets, including petroleum coke, that are controlled by the Venezuelan military.

[PRE] (http://www.pacificrimenergy.us), with offices in Caracas, Seattle, Beijing, Houston and New York, has an exclusive agreement with the military's mining, oil and gas company Camimpeg, which was created in February with a broad mandate that includes establishing upstream and downstream ventures. PRE is not affiliated with Pacific Rim Energy Group Co. Ltd., a petroleum coke trading firm that has operated in the US and Hong Kong under chief executive Jane Stone.

PRE is serving as Camimpeg's partner to develop contracts with foreign investors and operators in more than 20 different industries, including petroleum coke, oil, gas and asphalt, a senior PRE executive tells Argus.

Camimpeg's board of directors, made up of high-ranking military officers and defense ministry officials, reports to defence minister General Vladimir Padrino Lopez, whom President Nicolas Maduro this week designated to head the crippled oil-based economy.

Neither Camimpeg nor PdV commented on the agreement with PRE.

Camimpeg's ascendency, seen by government critics as a vehicle to ensure the military's loyalty to Maduro, appears to diminish the sphere of state-owned oil company PdV, Venezuela's traditional economic engine. PdV's influential chief executive Eulogio Del Pino also serves as energy and mining minister. Del Pino has held a number of international roadshows in recent months to showcase Venezuela's oil, gas and mining potential, but investors have proved cautious amid signs of tension among the ruling elite and growing unrest driven mainly by acute shortages of food and medicine.

PdV remains in control of Venezuela's massive petroleum coke stockpile at the Jose complex on the coast, where coke from oil upgraders has built up into an open-air stockpile totalling as much as 30mn t. Camimpeg has access to the inventory and the ability to set up any new infrastructure at Jose for a separate program with any new partners, operators or investors, PRE said. The two existing piers at the Jose port, Petro San Felix and Petrocedeno, are plagued by frequent breakdowns that have contributed to the coke build-up. Argus witnessed these piles in April 2015.

In addition to coke exports, PRE is seeking a partner or operator to build calcining and anode-production capacity or other downstream operations to upgrade Venezuelan coke for the steel and aluminium markets.

Foreign companies are broadly wary of doing business with PdV because of the company's long list of unpaid debts. Italian trader Energy Coal resorted to suing PdV's US subsidiary Citgo in a US court last year in an attempt to recover debt it says it is owed after the breakdown of its contract to build a petroleum coke midstreaming terminal in Venezuela.

It is unclear if the military will do better at recovering investor confidence.

Venezuela's opposition-controlled National Assembly has said that joint ventures that it has not ratified are not valid.

The International Monetary Fund forecasts that Venezuela's economy will contract by 8pc in 2016 and experience triple-digit inflation.