China showing increasing interest in Orimulsion

Venezuela's bid to boost exports of Orimulsion has met with success in China. Venezuela's state-run Orimulsion company, Bitumenes del Orinoco (Bitor), a subsidiary of PDVSA, said China would buy around 2 mm tons of the fuel this year, twice the amount it imported last year. China "has a renewed interest in our product," the company's public affairs manager, Marco Angeli, told IPS.

Orimulsion is a fuel for thermoelectric plants, developed in Venezuela -- a South American country with large reserves of extra-heavy crude, especially in the Orinoco oil-belt in the central part of the country -- from two parts heavy petroleum or bitumen, one part water and a small percentage of additives. It is marketed as a cheap alternative to coal and oil.

The arrival of one of the biggest freighters ever to dock in Venezuela is scheduled. After loading here, the ship will head to China carrying 200,000 tons of Orimulsion. President Chavez announced the imminent materialisation of an agreement by which China isto participate in an investment designed to increase Venezuela's production of Orimulsion by at least 2 mm tpy.
Bitor confirmed that it is carrying out feasibility studies on that possibility, which would make China the second biggest importer of Orimulsion, after Italy. Chavez himself clinched the new deal with China in an October tour to a dozen countries in Asia, in which Orimulsion figured high on his agenda. Venezuela chose to focus on the Asian market due to major energy projects there, which open up new business horizons for the fuel.

Orimulsion has run into problems due to its reputation as a dirty fuel. While Venezuela currently has the capacity to produce more than 6 mm tons, it sold less than 4 mm in 1998. Concerns raised by environmentalists thwarted deals with the United States and Britain. Orimulsion is an extra heavy, high sulphur crude which unlike petroleum does not float on the water immediately after a spill, but quickly diffuses, making it immensely more difficult to clean up.
Authorities in Venezuela claim that more than 90 % of the sulphur can be removed before burning, making Orimulsion no more hazardous than fuel oil. They also say pollution generated by the fuel has often resulted from the failure of clients to adopt the necessary control measures. Local authorities have suggested that campaigns against the fuel have been backed by the coal industry, which feels threatened by the new competition.
Venezuela's oil industry has been working on cleaner versions of the fuel, which is currently in its fourth generation. The local press has reported that an even "greener" version is now being developed. Bitor experts met with environmentalists and representatives of power companies last year at the headquarters of the World Bank's International Financial Corporation.
The Corporation is considering supporting projects using Orimulsion and is working on improving relations with environmental groups. Venezuela's master plan for Orimulsion entails a fourfold increase in production capacity by the year 2006, to 22 mm tons, through an expansion of the number of clients.

In the early 1980s, researchers in oil-rich Venezuela created the tar-like fuel while exploring the possibility of making bitumen easier to handle through the use of water, for which they designed an emulsion that would allow them to combine the two. In the mid-1980s, tests were conducted around the world, and in 1988 Orimulsion began to be sold to Canada.
It is now imported by Italy, Denmark, Canada, China, Lithuania and Japan. In the future, Bitor also expects to find clients in Latin America. Meanwhile, it is focusing on the Asian market, where interest in the product has been clearly demonstrated. Besides offering Orimulsion to China, Chavez paved the way for increasing sales to Japan, expected to amount to 300,000 tons in 1999, 750,000 tons in 2000 and as many as 4 mm tons by 2005 or 2006, if a major power project comes through there.

The president's Asian tour also helped consolidate initiativesto sell Orimulsion to South Korea and the Philippines. Bitor authorities have said they hope to be producing 13 mm tons by 2002. Talks have also got underway in India. "The Finance Ministry already authorised the free importation of Orimulsion," Venezuelan ambassador to India, Walter Marquez, said in late 1999.
In addition, Bitor has been negotiating with Northern Ireland. And it has not given up on its aim to make it into the United States, a possibility if a "green" version of the fuel is developed. The state-run company must demonstrate its capacity to turn a profit. In 1999, the company brought in $ 200 mm in export revenues, which left an estimated net profit of $ 10 to $ 12 mm.