Venezuela orimulsion delivery to S.Korea set to resume

www.planetark.org

SOUTH KOREA: February 27, 2003

SEOUL - Power generator Korea Southern Power Co Ltd expects delivery of a power fuel orimulsion from Venezuela to resume in March, after delays due to strikes in the Latin American country, a company source said yesterday.

The power generator, wholly-owned by state-run power monopoly Korea Electric Power Corp (KEPCO) (15760.KS), bought 25,000 tonnes of orimulsion in January from Venezuela under a spot contract, the first of its type in country, and planned to keep importing the fuel throughout the year. It was directly burned at Korea Southern's Youngnam thermal power plant.

But the delivery was halted from February due to an anti-government strike aimed at forcing Venezuelan President Hugo Chavez to step down.

"We will be able to see orimulsion delivered in March as they (Bitor) told us production would return to normal by the end of February, and they could make the delivery in March," a company source who asked not to be identified told Reuters.

OFFICIALS TP VISIT BITOR

Orimulsion, a mixture of 70 percent extra heavy crude oil and 30 percent water, is produced in Venezuela and used for direct burning at power plants.

He said Bitor, an affiliate of Venezuela's state oil firm PDVSA, would later notify them of details of the March amount.

Officials of the KEPCO unit plan to visit Bitor next month to resume talks for a one-year term contract for 2004 and hope to have term contracts over the following years after 2004, the official said.

Korea Southern has enough capacity to use up to 600,000 tonnes of orimulsion a year.

The first deal for orimulsion imports came amid a shortage of liquefied natural gas (LNG) in South Korea which stemmed from strong demand due to colder winter.

There has also been strong demand for oil from Japan, where shutdowns of nuclear power plants for safety checks have prompted higher demand for those fossil fuels.

State trader Chinaoil said yesterday it loaded early this week, about 150,000 tonnes of orimulsion from Venezuela after two months of delays due to the strike, which crippled oil exports from the world's number five oil exporter.