Aruba takes back refining, terminal assets from Citgo

The Aruban government has reached an agreement with Citgo Petroleum Corp. to take back control of former Valero Energy Corp.’s 235,000-b/d refinery and terminal in San Nicolas, Aruba, which Citgo Aruba Refinery NV previously intended to restart (OGJ Online, June 13, 2016).

Following the signing of an Oct. 9 memorandum of understanding, Aruba now retains rights to seek other interests for operation of the refinery, dock, and terminal, the government said.

With the MOU now in place, Aruba plans to start discussions with more than 25 companies that have expressed interest in taking over the refining and terminal operations with which the government previously was unable to negotiate.

Alongside forming a negotiation committee and complying with requests from the local union for staffing the refinery, the government also plans to organize a formal roadshow in Houston targeting viable companies to trigger interest in investing in the refining and terminal assets.

Specifically, the government said it is seeking partners that:

• Have the funds to immediately invest in the refinery.

• Will transform the refinery into a state-of-the art operation.

• Will abide with environmental laws and regulations.

• Are willing to pay their fair share to the Aruban government.

• Will treat prospective employees well and fairly.

Starting point of negotiations with potential operating partners for the refinery, terminal, and tank farm will be retention of as many existing employees as possible.

Under its earlier agreement to restart operations at the site, Citgo promised it would take care of employees’ wages plus active-service years until a new operator was in place.

Following US sanctions placed on Citgo’s parent company Petroleos de Venezuela SA in early 2019 and ensuing financial turmoil, however, Citgo announced it had no funds to cover these costs, which included the operator paying all its debts with employees, contractors, and other vendors (OGJ Online, Feb. 26, 2019; Jan. 29, 2019).

The government disclosed no further details regarding any progress Citgo made on its initial plan to restart the refinery and terminal operations were not disclosed, nor did it reveal a timeframe for the selection of a new operating partner.

The government did acknowledge, however, that—despite a lack of maintenance—it believed tanks at the tank farm were still of great value.

Contact Robert Brelsford at [email protected].