Klesch has deal for Curacao refinery

German refiner and commodities trader Klesch Group and Curacao's state-owned refinery company RdK have signed a preliminary agreement to operate the Dutch-controlled island's 335,00 b/d Isla refinery and a deepwater terminal, the companies say.

Isla is currently operated by Venezuela's struggling state-owned oil company PdV under a lease that expires at the end of this month.

PdV agreed earlier this month to continue operating the refinery for at least another year while RdK concluded an agreement with a successor lessee.

Terms of the lease have not been released, including a date for the takeover of the century old refinery, but both said definitive conditions will be concluded by the middle of 2020.

Curacao's government instructed RdK to seek an agreement with an operator with which it could conclude a "long-term" lease for the facilities.

Klesch Group will be required to invest in Isla to modernize its units and make sure the facility complies with environmental standards, the government said.

PdV once used Isla to process crude into gasoline, naphtha, diesel, jet fuel, asphalt, base oils and lubricants, and to blend its diluted extra-heavy crude with light crude for export. But most of the complex has been off line for most of the past two years because of a lack of feedstock, maintenance and utility services. A thermal cracking unit at the refinery is currently processing Venezuelan heavy crude.

PdV's loss of access to the Bullen Bay deepwater terminal will deprive it of critical storage space to tranship its cargoes on to larger vessels for Asian markets.

Curacao has been temporarily exempted from US sanctions on companies doing business with PdV, and is keen to end the relationship with the Venezuelan firm.

The agreement between RdK and Klesch is the second negotiated by Curacao for a successor to PdV.

RdK and Chinese state-owned Guangdong Zhenrong Energy (GZE) concluded a 40-year lease of Isla in November 2016 after PdV indicated it was not interested in renewing its agreement. But the island's government unilaterally cancelled the agreement with GZE in January 2018, saying the company did not have the money to deliver the project, and did not have "the unconditional support of the Chinese government as it had indicated when signing the agreement."

By Canute James