Explosion Halts Production at Venezuela's Amuay Facility

The fire has spread to a third storage tank

Amuay, Venezuela's largest, and the world's second largest refinery suffered a gas explosion on Saturday and reported today that the fire has spread to a third storage tank.

Firefighters were reported to be attempting to contain flames after the explosion resulted in 48 deaths, and several more injuries.

Oil Minister Rafael Ramirez said two of the fires at tanks holding naphtha may burn out by tomorrow.

Mr. Ramirez also said that the facility, which is owned and operated by state owned Petroleos De Venezuela SA (PDVSA), has 10 days of inventory to meet domestic and export supply obligations, and the country's other refineries are operating at full capacity to "deal with any situation in our domestic market."

Amuay forms part of the Paraguana complex together with Cardon and Bajo Grande and has a combined capacity of about 950,000 barrels per day (bpd), of which Amuay has the capacity to produce 645,000 bpd.

Mr. Ramirez said he expects that operations will be restarted within two days after all of the fires have been extinguished.

Venezuela's main export markets are the U.S. and China, with data from the U.S. Energy Information Agency (EIA) showing it was the fourth largest provider of crude for the U.S. in May at 821,000 barrels per day.

A lack of materials was blamed for seven out of nine planned maintenance programs being postponed at Amuay last year, according to PDVSA's 2011 annual report, but Ramirez has denied that PDVSA failed to invest in maintenance with local reports saying $6 billion was spent in the past five years on its refining operations.

President Hugo Chavez has declared three days of mourning and toured areas affected by the blaze.