Aruba, Citgo to decide refinery fate by November

OREANDA-NEWS. September 30, 2015. Venezuelan state-owned PdV?s US downstream subsidiary Citgo and the Aruba government will decide "by the end of November" whether to reopen and operate the 280,000 b/d refinery on the island, an Aruban official close to the negotiations tells Argus.

Citgo is sending a technical team to Aruba to determine the feasibility of operating the refinery that US firm Valero shut down for economic reasons in March 2012. The independent refiner has not commented on the current negotiation, deferring to Aruban and Citgo representatives.

"The government is keen for the refinery to be reopened because of the economic benefits to the island's economy," said Andin Bikker, president of Aruba's senate committee that has been investigating the prospects for reopening the refinery. "But the discussions will also be influenced by concerns about the environmental impact of the refinery's operations on the island."

Aruba and Citgo signed a memorandum of understanding to examine the reopening of the facility, the island's energy ministry said on 25 September.

It is not known when the Citgo officials will begin their evaluation. But the Dutch government will be asked to assist in the environmental impact assessment, the island's energy ministry said on 25 September.

Citgo has not commented.

Citgo would guarantee crude supply for the reopened refinery under a possible 20-year contract, Aruba?s energy ministry said.

"The energy ministry is 90pc certain that Citgo will breathe new life into the refinery," Bikker said.

The facility is currently used as an oil storage terminal, with 63 storage tanks with almost 12mn bl of total capacity.

The facility also has two deepwater marine docks capable of receiving ultra-large crude carriers and six refined product docks, as well as a truck rack for local deliveries.

Discussions between Aruba and Citgo over the refinery's future started in July 2015 after Valero agreed to a pause in the dismantling of the refinery.

When it was in operation, the refinery processed heavy sour crude into distillates and intermediate feedstock. It did not produce finished products.

Aruba's prime minister Mike Eman said in August 2012 that China's state-run PetroChina had concluded an "agreement in principle" with Valero to purchase the refinery.

The transaction did not materialize, leading Valero to close the facility.

Valero at one time had considered building an LNG import terminal on the island, but the project did not come to fruition.