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Curacao rattled by ConocoPhillips-PdV dispute

09 May 2018 00:13 (+01:00 GMT)
Curacao rattled by ConocoPhillips-PdV dispute

Bogota, 8 May (Argus) — The Dutch-controlled island of Curacao is taking "pre-emptive and precautionary steps" to ensure local oil supply in the face of a threatened court-ordered seizure of Venezuelan oil assets by US independent ConocoPhillips, the prime minister´s office said late today.

"As per our latest information ConocoPhillips has not seized anything on Curaçao yet," the office said. "Vessels that were to call on Curaçao on which there is an attachment have been strategically diverted to Venezuelan ports."

Venezuelan state-owned oil company PdV operates the 320,000 b/d Isla refinery under a long-term lease that expires at the end of 2019. The company also leases the nearby Bullen Bay terminal for transshipment and storage, part of a logistical network in the Dutch Caribbean that is vital to getting Venezuelan oil to international markets such as China and India.

ConocoPhillips has already obtained court-ordered attachments on other PdV assets in the Dutch Caribbean, where such legal actions are easier to pursue than in other jurisdictions. Among the targeted assets is oil stored at PdV´s 10mn bl Bopec terminal on Bonaire and separate storage that is leased from NuStar on St Eustatius.

ConocoPhillips is seeking to collect $2bn from PdV as per a recent ruling by the International Chamber of Commerce (ICC) for Venezuela´s takeover of two of the US company´s main Venezuelan assets in 2007. ConocoPhillips has said it will resort to all legal action to enforce the $2bn award.

Less than the oil or the deteriorated oil installations themselves, ConocoPhillips is seeking to pressure PdV operationally to fulfill the payment. A cutoff of the Caribbean network and freight limitations driven by seizure threats jeopardize PdV´s ability to sustain oil exports, which have already fallen sharply on the back of tumbling domestic output. A PdV official tells Argus that some of what crude production remains may need to be shut in because of a dearth of onshore storage in Venezuela, if the standoff is prolonged.

PdV has pulled some of its oil tankers into Venezuelan maritime territory to avoid further seizures. In recent years, creditors have regularly obtained local court orders to impound the tankers or their cargo to force PdV to pay its debts. At present the Venezuelan-flagged 105,000t Terepaima crude tanker is being held off Bonaire in a seizure that is apparently unrelated to the ConocoPhillips action. The Panama-flagged Proteo, a 600,000-700,000 bl Lakemax carrying Venezuelan Boscan heavy crude that had been held off Curacao, was released in March following an apparent settlement with unnamed creditors. The vessel is currently in Venezuelan waters.

Curacao and the other small islands rely on PdV´s operations to sustain their economies. The Isla refinery alone accounts for 2,000 local jobs.

"We are a country of laws and any request for an attachment can be presented to an impartial judge and if that judge finds sufficient grounds for that attachment to be adjudicated, the government like any other private citizen has to respect the laws of the land," the Curacao prime minister´s office said. There has been no official contact with PdV or ConocoPhillips, the office said, to the best of its knowledge.