May 24, 2021 [S&P Globall Platts] – Curacao plans to auction May 28 hundreds of thousands of barrels of crude oil and refined products formerly owned by PDVSA due to the Venezuelan state-owned company’s failure to pay the island’s government back rent and interest for its storage.
According to a government notice published in local media, 864,793 barrels of crude, bitumen, fuel oil and other products, including components to make gasoline and naphtha, stored in Korsou Refinery’s Bullenbay terminal are to be auctioned.
PDVSA operated the Curacao refinery, known as the Isla Refinery, from 1985 to 2019 under a rental agreement with the owner, the Dutch Caribbean autonomous government of Curacao. The refinery has been shut down since 2018, according to previous reports.
“The proceeds from the sale of these inventories will be given to RdK to pay workers’ salaries and other costs,” a source close to the negotiations said May 24.
The PDVSA inventories on Curacao were embargoed by various creditors, including RdK.
Local media reported anther 550,000 barrels of crude aboard an embargoed tanker at Curacao were sold on the international market in mid-May for $25 million.
The liquidation of the inventories and resolution of other claims against PDVSA are important step to an agreement between the government and a new refinery operator.
On May 19, the Common Justice Tribunal of Curacao confirmed that PDVSA owes $100 million in interest and other costs related to delays in making rental payments for the refinery.
For its part, PDVSA has filed demands in the Curacao courts against RdK claiming failures in the industrial services plant affected the functioning of the refinery. The Curacao Refinery Utilities industrial plant is the property of the Curacao government and delivers electricity to the refinery and around Curacao.
In 2017 and 2018, the refinery was impacted by a fire that occurred in the CD-3 distillation unit. The lack of available crude to process also affected operations.
RdK signs tentative agreement with CORC
Marcellino de Lannoy, director of RdK, announced a tentative operating agreement with Curaçao Oil Refinery Complex, a local group of entrepreneurs, according to local media reports on May 21 The pre-agreement with CORC will be presented soon to Curacao’s cabinet for approval. The island’s new government took office May 11 and will serve until 2025.
RdK and CORC have been in negotiations since January to operate petroleum installations which consist of the Isla refinery with its 335,000 b/d of capacity, the industrial services plant and the Bullenbay deepwater terminal. With a storage capacity of 17.8 million barrels of crude oil and refined products, the terminal is the third-largest in the Caribbean, after St. Croix, US Virgin Islands, and Borco in the Bahamas.
This is the fourth attempt of the Curaçao government to come to an agreement with a new operator to replace PDVSA. RdK held previous unsuccessful negotiations with China’s Guangdong Zhenrong Energy and the Klesch Group. It also carried out unsuccessful negotiations with the US’ Motiva.
According to local media, the new deal with CORC contemplates the processing of 200,000 b/d of crude. However, an unspecified investment will be necessary to modernize the industrial services plant and to guarantee the supply of electricity and vapor for operations.
“Environmental issues could be the final stumbling block. In 2019, a group of environmentalists in a court filing against the government demanded that it comply with strict specifications,” said a source close to the negotiations. “The government appealed and the judge has postponed a decision five times.”
PDVSA did not immediately respond to a request for comment.
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