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December 4, 2019

Volume 3 Issue 4

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PdVSA Secures Short-term Isla Refinery Extension

Petroleos de Venezuela S.A. agreed to a short-term lease extension with Refineria di Korsou – the Curacao government entity that owns the Isla Refinery – to operate the facility into 2020 as the latter negotiates with a preferred bidder to take over operations, according to a recent news report.

PdVSA’s lease for the Isla Refinery was originally set to expire at the end of this year, but a drawn-out process to find a replacement has forced the two sides to agree to an extension for up to a year to allow for a transition period between operators, Reuters reported Dec. 1.

RdK released a statement in September saying negotiations had begun with Geneva-based industrial commodities conglomerate Klesch Group, its preferred bidder after a years-long effort to find PdVSA’s replacement. At the time, RdK said it intended to reach an agreement no later than November of this year, but the report said negotiations are still ongoing. RdK could not be reached for comment by deadline.

The report also said PdVSA President and Venezuela Oil Minister Manuel Quevedo had met with RdK to discuss the possibility of PdVSA continuing to operate the refinery in July. Then the two sides met last week to discuss a transition arrangement along with the possibility of performing maintenance on the mostly idled refinery.

Cash-strapped PdVSA has been unable to procure crude oil to operate its units at the refinery since ConocoPhillips brought legal action against the Venezuela-owned oil company in 2018.

Though the two organizations eventually settled, sanctions against PdVSA have continued to prevent the refinery from receiving any crude oil. PdVSA has operated Isla Refinery since Shell conveyed it to the Netherlands Antilles – now Curacao – in 1985.

The search for a new operator began in 2013 and appeared to be coming to a close in December 2018 when the refinery chose a preferred company, which a Curacao news organization identified as Houston-based Motiva Enterprises. The preferred bidder withdrew from negotiations after a corruption probe was launched into the selection process, citing a delay in negotiation and the refinery’s review of other opportunities for its withdrawal, according to the refinery.

The probe concluded no fees were transferred for preferential treatment, though three workers were dismissed from the Curacao company due to violation of its rules of conduct.

Curacao is an island located in the southern Caribbean and is a constituent country of the Netherlands.

The Isla Refinery, located in Curacao’s capital Willemstad, has crude oil production capacity of 335,000 barrels per day. The refinery includes a base oil plant that has capacity to produce 5,000 b/d of API Group I paraffinic base oils and 3,700 b/d of naphthenic stocks.