Venezuelan audit pointed to operational inefficiencies at Petrojam

(Jamaica Observer) An audit into the management of Petrojam, commissioned by the oil refinery’s Venezuelan partners, uncovered operational inefficiencies that, according to the investigators, led to “opportunity losses” estimated at just over US$22 million.

The audit, which covered activities between April 2015 and October 2017, showed that the inefficiencies were derived mainly from two factors — the refinery’s technology, which is hydro-skimming; and the wear level of the facilities.

However, Petróleos de Venezuela, SA (PDVSA) — the Venezuelan State-owned oil and natural gas company which holds a 49 per cent stake in Petrojam — on sending the report to then Petrojam Chairman Perceval Bahado-Singh in February this year, noted that after a review of the findings, Petrojam’s management “initiated immediate actions” aimed at resolving the issues raised by audit.

According to PDVSA senior executive Juan José Rodríguez, the assessment included a review of the activities carried out in Petrojam’s core processes covering the evaluation of controls in compliance with operational and financial goals, the linear programming model and refining margin, procurement of goods and services, purchases of crude oil and inputs for refining and blending, sale price of fuels, control of volumetric losses, and compliance with maintenance plans.

“The evaluation of the hydrocarbon purchase processes was based on a random sample of 23 purchases made during the period evaluated,” Rodríguez noted in the transmittal letter accompanying the audit report.

However, he said that during the execution of the audit, limitations were presented that did not allow partial or total compliance with the tests prescribed in the proposed audit programme. “This was the case of the information provided concerning purchases of crude and finished products which did not come from the SAP system, as requested, but in Excel spreadsheets, so the audit tests were carried out based on an unofficial document, conditioning the execution thereof,” Rodríguez said.

In a summary of the audit, Rodríguez pointed out that:

* Utilisation factor and service factor indexes were found below the targets established for the years 2016 and 2017, leading to estimated opportunity losses of US$22.7 million.

* Compliance with key financial performance indicators is due to favourable market conditions and not to operational efficiencies.