Venezuela ‘uncertain’ over future of Curacao Island refinery

Venezuela’s state-owned Petroleos de Venezuela SA (PDVSA), said to be uncertain over its equity standing, has yet to make a final decision over investing $1.5 billion in the 320,000 b/d Isla refinery on Curacao Island.

Eric Watkins
OGJ Oil Diplomacy Editor

LOS ANGELES, Mar. 19 -- Venezuela’s state-owned Petroleos de Venezuela SA (PDVSA), said to be uncertain over its equity standing, has yet to make a final decision over investing $1.5 billion in the 320,000 b/d Isla refinery on Curacao Island.

“We have not abandoned out commitments to Isla,” said Rafael Ramirez, Venezuela’s energy and oil minister and PDVSA President. “But we will not commit to any additional investment there until we clarify our position, because we are leaseholders.”

PDVSA operates the refinery as a tenant and is negotiating to acquire a stake in the plant. However, its owner, the Dutch Antilles' government, said PDVSA failed to undertake regular maintenance work at the refinery.

The leader of the Dutch Antilles, Prime Minister Emily de Jongh-Elhage, said the Isla refinery remains vital to the Caribbean island but PDVSA has not kept an agreement to clean it up.

“PDVSA should comply with the clauses in the rental contract it has with Isla. The contract specifies they should do regular maintenance, and they have not always complied,” De Jongh-Elhage told Reuters news service. “The refinery must comply with the ecological norms prescribed by the law of our country,” she added.

De Jongh-Elhage said her government, which owns the refinery and leases it to Venezuela, wanted PDVSA to stay on the island until at least 2019 when the current contract ends. “For us it is important not to dismantle the refinery. The contract with PDVSA will expire in 2019, so we still have a few years to decide what we are going to do with the refinery,” she said.

Uncertainty over PDVSA’s commitment to the refinery emerged in January when Venezuela’s President Hugo Chavez protested that the Dutch Antilles allows US authorities to use Curacao as a base for flights to spy on his country.

De Jongh-Elhage denied Chavez’s claim, saying that the US base has been on the island for 10 years. “The facilities are used to combat drug-trafficking. It is explicitly not a military base.”

The refinery nonetheless has been shut down since the beginning of March, allegedly due to a blackout at the power plant owned by Curacao Utilities Operating Co., which supplies the refinery with electricity, steam, and water. The plant’s restart date remains in question.

“When it will re-start, I can't tell you because I don't know,” said one refinery official. “But it definitely won't be until at least April. For March, there will be no production.”

Contact Eric Watkins at hippalus@yahoo.com.

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