Citgo affiliate dissolves Aruba downstream units

A corporate cousin of Citgo, the US refining subsidiary of Venezuela's state-owned PdV, has dissolved four entities in Aruba where it once planned to refurbish an oil refinery.

Citgo Aruba Holding (CAH), a subsidiary of Delaware-based PdV Holding, has voluntarily liquidated Citgo Aruba Terminal NV, Citgo Aruba Marine Operations NV, Citgo Aruba Supply NV and standalone entity Citgo Aruba Thrift Foundation. Citgo Aruba Refining (CAR), another subsidiary of CAH, remains active for now. The liquidations were published this afternoon in Aruba's official gazette.

The four defunct companies were established in Dutch-controlled Aruba in 2016, when PdV signed a lease to rehabilitate the 235,000 b/d San Nicolas refinery to upgrade its extra-heavy Orinoco crude into lighter synthetic oil. Houston-based Citgo Petroleum, which is also controlled by PdV Holding through intermediate entity Citgo Holding, was tasked with executing the ill-fated refinery project.

The $1.1bn Aruba downstream initiative was already faltering in 2019 when the Citgo group of companies, including the refiner and its Delaware-based parent companies and affiliates with overlapping board members, came under the control of Venezuela's US-backed political opposition, leaving Caracas-headquartered PdV in the hands of Venezuelan president Nicolas Maduro's government.

The corporate schism grew out of the US recognition of an interim Venezuelan government led by Juan Guaido, and its imposition of oil sanctions on Venezuela in January 2019 in a failed campaign to topple Maduro.

The Guaido-led administration reluctantly inherited the Aruba project that was unpopular with Citgo Petroleum's senior US managers and which was never approved by Venezuela's National Assembly. Repeated project delays sapped the confidence of Aruba's authorities in Venezuela's ability to carry it out. PdV blamed US financial sanctions imposed in 2017.

In order to wind down the Aruba business that was already terminated in 2020, PdV Holding has a license from the US Treasury Department's Office of Foreign Assets Control (Ofac), which administers the sanctions. Now that the Aruba ties are mostly severed, PdV Holding has one less distraction from its main focus: defending Citgo itself from multiple creditors, including former Canadian mining company Crystallex, ConocoPhillips and PdV 2020 bondholders that are pressing their claims in US courts.

Parallel upgrader

Under the 2016 lease signed by late PdV chief executive and former Citgo chief executive Nelson Martinez with the Aruban government, CAR was to refurbish the installations and build a 110km (68mi) natural gas pipeline from Venezuela's Tiguadare treatment facility to run the complex. Around 209,000 b/d of diluted crude oil (DCO) from Venezuela's Orinoco heavy oil belt were to have been upgraded into 125,000 b/d of 22.5° API Maya-like syncrude with 1.2pc-1.5pc sulfur. In a replication of PdV's integrated upgraders inside Venezuela, the stripped-out naphtha would have been recycled back to the country, and sulfur and coke byproducts sold.

Aruba is among several Dutch Caribbean islands that formed part of PdV's nearshore logistical network, offering deepwater ports, transhipment and supply services, refining and storage. The distressed Venezuelan company's commercial ties to the islands started to fray in tandem with the financial sanctions. Taking advantage of Dutch legal jurisdiction that facilitates debt-related attachments, ConocoPhillips and a host of other creditors targeted PdV's assets and cargoes passing through the islands in an effort to collect overdue debts.

By Patricia Garip