Aruba reclaims refinery assets from PdV

The government of Dutch-controlled Aruba is reclaiming refinery and terminal assets that had been leased to Venezuela's national oil company PdV subsidiary Citgo for an ambitious upgrading project.

Aruba's prime minister Evelyn Wever-Croes today said an agreement was reached between the Aruba government, state-run refinery owner RdA and Citgo Aruba Holding to transfer all assets back to RdA.

The repossession means that Aruba can move forward to try to find another operator to refurbish and restart the refinery, or lease 12mn bl of storage at the terminal. At least one contractor is preparing to embargo Citgo Aruba's local bank accounts to collect on unpaid debt, a senior Aruba government official told Argus.

Under a long-term lease signed in 2016, Citgo Aruba Refining was supposed to refurbish the 235,000 b/d San Nicolas refinery that was previously owned and operated by US refiner Valero. The ambitious $600mn-$700mn project would have included a 110km subsea natural gas pipeline from Venezuela's Tiguadare gas treatment facility to run the complex, which includes two cokers. Around 209,000 b/d of diluted crude oil (DCO) from Venezuela's Orinoco heavy oil belt would be upgraded into 125,000 b/d of 22.5°API Maya-like synthetic crude with 1.2pc-1.5pc sulfur. The stripped-out naphtha would be recycled back to Venezuela, and sulfur and coke sold.

The project barely got off the ground, partly because of US financial sanctions on PdV that were imposed in August 2017. Washington added crippling oil sanctions on Venezuela in January 2019. The sanctions are aimed at dislodging Venezuelan president Nicolas Maduro in favor of Juan Guaido, the head of Venezuela's opposition-controlled National Assembly who is recognized by more Western countries as interim president.

Citgo, a refiner with 750,000 b/d of capacity on US soil, is now controlled administratively by Guaido's parallel administration, although Citgo Aruba has remained in the hands of PdV, which is still controlled by Maduro.

The collapse of the Aruba project is the latest blow to PdV, which has lost most of its Dutch Caribbean logistical network that was critical to reaching export markets in the US and Asia. PdV's refinery and terminal lease on Curacao expires in December, and that island's government is negotiating with German refiner Klesch to take over the operations.

The loss of the near-shore assets, sanctions-driven constraints on exports and domestic storage limitations have forced PdV to step up oil exports to Cuba, Venezuela's close political ally.