Venezuelan state-owned PdV's US refining subsidiary Citgo has shelved plans to restart and upgrade Aruba's 235,000 b/d refinery, but the company is using the facility for logistics in spite of tensions between Caracas and the Dutch Caribbean.
Citgo "must slow down" the $685mn plan to revamp the refinery because of US financial sanctions on PdV that have blocked access to financing, Citgo refining vice-president James Cristman said.
Citgo has already built a construction camp and is "working hard to find a solution and hopes to fully resume the project in the near future," Cristman added.
Citgo signed a 15-year lease to operate the San Nicolas refinery in June 2016, promising to restart and upgrade the facility to process Orinoco extra-heavy crude.
Former refinery owner Valero sold the money-losing plant to Aruban state-owned RDA after halting operations in 2012, agreeing to suspend a dismantling process.
Despite Citgo's indefinite pause in the refinery work, Aruba has emerged as a key logistical link for Venezuela, just 18 miles (29km) away.
According to Caribbean shipping sources, Citgo often loads Venezuelan diluted heavy crude oil (DCO) and lighter Venezuelan grades such as Corocoro at the Bullen Bay terminal in fellow Dutch-controlled island Curacao. PdV has a separate long-term refinery lease in Curacao that expires at the end of 2019.
From there Citgo ships the crude to Aruba for offshore blending. The DCO is sometimes blended with Pedernales grade or medium blendstock as well. After Aruba, Citgo takes the blended crude to its US refineries in Texas and Louisiana, the shipping sources tell Argus.
Elsewhere in the Dutch Caribbean, PdV owns the Bopec storage terminal in Bonaire and leases storage at NuStar's facility in St Eustatius.
The Aruba project was aimed at bulking up PdV's nearshore logistics on the eve of the December 2019 expiry of its lease on the accident-prone Isla refinery in Curacao. Deteriorated infrastructure in Venezuela itself, and a Dutch threat in December to close Bopec unless PdV makes critical repairs add to Aruba's relevance for PdV.
The Venezuelan company is also using its Dutch Caribbean assets to supply crude to the Cienfuegos refinery in Cuba, a close political ally of Caracas.
But the route from Venezuela through the Dutch Caribbean and onward to the US Gulf coast and other destinations, namely China and India, is fraught with risk for PdV because of frequent debt-related detentions of its cargoes or vessels. The Panamanian-flagged Proteo tanker has been detained in Bullen Bay since early January as a result of a preliminary embargo on its cargo of Venezuelan Boscan crude and the ship's bunkers. Another vessel, the Greek-flagged Promitheas carrying Russian Urals, is also on hold but has yet to berth in Curacao.
The Aruba refinery site features 63 storage tanks with almost 12mn bl of total storage 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.
