Eagle LNG signs preliminary terminal deal with Aruba

US firm Eagle LNG has signed a preliminary agreement with state-owned Refineria di Aruba (RdA) to install an LNG receiving and regasification terminal on the Dutch-controlled island.

The letter of exclusivity signed with RdA on 14 January "allows us to evaluate engineering and permitting needs that are all part of the steps toward a definitive agreement. Our goal is to begin construction and begin hiring this coming summer," an Eagle LNG spokesperson told Argus.

The timing of a final agreement and estimated investment are yet to be determined, Eagle LNG said.

The LNG will replace heavy fuel oil used for water treatment and power generation in Aruba, while the island will serve as a distribution and bunkering hub for the region, Eagle LNG said.

RdA selected Eagle LNG as well as US consortium Quanten in December to develop the site of a former oil refinery that US firm Valero dismantled in 2012.

Quanten plans to build a more modern refinery as part of a comprehensive development plan for the island, Quanten chief executive Jeff Myers told Argus last month.

The refinery and LNG project would help to turn around Aruba's struggling economy at a time when tourism has collapsed because of the Covid-19 pandemic.

The island is part of the Dutch Caribbean that used to rely on oil business from nearby Venezuela, providing storage and logistics for Venezuelan national oil company PdV. The business started to wane several years ago as Venezuela lost oil production capacity, and dried up altogether when Caracas became the target of US sanctions.

In the case of Aruba, PdV's US refining subsidiary Citgo was supposed to refurbish the refinery in a $1.1bn project dating back to 2016. Scant progress was made, and the project fell apart after Venezuela's US-backed political opposition wrested control of Citgo from PdV in 2019.

By Patricia Garip