Citgo transfers San Nicolas refinery, terminal assets to Aruban government

Citgo Aruba Holding (CAH), a subsidiary of Petroleos de Venezuela SA’s PDV Holding Inc., has reached an agreement with Refineria di Aruba NV (RDA) for the official transfer of operatorship 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).

The agreement marks the first action of a process that will end with the execution of the termination agreement of the Aruba refinery project jointly planned by PDV Holding and partners RDA and the government of Aruba by March 16 after Aruba’s parliament approves the termination, Citgo Petroleum Corp. said.

The parties are terminating the agreement for the refinery’s proposed restart on amicable terms, according to the operator.

Announcement of the transfer agreement follows ongoing negotiations between CAH and the government of Aruba regarding the future of the San Nicolas refinery, terminal, and associated maritime operations since April 2019.

The two parties signed a memorandum of understanding (MOU) to suspend the contract and work towards a responsible and nondisruptive transition in operations in October 2019 (OGJ Online, Oct. 11, 2019).

Termination of the CAH contract, however, does not impact the government of Aruba’s contracts with Citgo, under which the US refiner will continue to provide its product and services to all gas stations on the island, as well as continue to supply jet fuel to its Queen Beatrix International Airport.

In a separate release on Feb. 29, the government of Aruba said it would soon present a “law concept” to the Aruban parliament under which parties will discuss termination of the refinery restart agreement. Following the parliamentary presentation, the government said it will initiate the process of finding a new operator for both the refinery and its associated terminal.

With the official transfer agreement putting operations of the refinery and terminal into RDA’s hands completed on Feb. 29, Aruba—through state-owned companies RDA and Energy Terminal of Aruba (TDEA)—will temporarily operate the site’s transshipment terminal, the government said.

RDA and TDEA will be responsible for maintenance of the refinery while the government seeks new investors and operators for the refinery and associated infrastructure.

Future investment, refinery restart plans

Following the signing of the October 2019 MOU, the Aruban government said it planned to start discussions with more than 25 companies that had 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 planned to organize a formal roadshow in Houston targeting viable companies to trigger interest in investing in the refining and terminal assets.

While further details regarding Aruba’s progress on its previously announced search plans have yet to be disclosed, the government said it was 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, the government said.