PdV Gets Curacao Reprieve

(Argus, Patricia Garip, 2.Dec.2019) — Venezuela’s state-owned PdV struck a preliminary agreement with Curacao to hang on to the Isla refinery and Bullen Bay terminal for a transition period of up to one year after its lease expires at the end of December.

The preliminary lease extension is another notch on PdV’s belt as US oil sanctions meant to topple the Venezuelan government of President Nicolas Maduro near their one-year anniversary without achieving their objective.

The Curacao assets are part of PdV’s once-bustling logistical network in the Dutch Caribbean, but another court-ordered seizure of Venezuelan crude at Bullen Bay in late November illustrates the legal and operational risks still dogging the company there. Unless a settlement is reached, the Venezuelan light oil is scheduled to be auctioned off on 11 December on behalf of one of PdV’s myriad creditors.

For PdV, the seizure is merely another hiccup in its wider strategy to remain in Curacao. Appealing directly to the island’s oil unions, PdV successfully lobbied the Curacao government to retain the assets as a way to temporarily safeguard local jobs until a new operator takes over. PdV officials have told Argus they are willing to relinquish the aging refinery, but they want to hold on to Bullen Bay, a deepwater terminal that provides critical storage and facilitates transshipment.

The management of RdK, the Curacao state company that owns the 335,000 b/d refinery, flew to Caracas on 30 November to meet with PdV chief executive and oil minister Manuel Quevedo. RdK was careful to state that the specifics of the arrangement have yet to be worked out and must abide by the terms of a US Treasury license that exempts Curacao from US sanctions on PdV.

In recent months, RdK has been engaged in exclusive talks with Klesch Group, the German refiner and trader, for a new lease on the refinery and terminal, as well as the utility company that services them. But the island’s earlier hope that Klesch would step in even before PdV’s long-term lease ran out has been dashed. RdK told the oil unions last month that Klesch’s due diligence was taking longer than expected. Klesch has not commented on the talks.

PdV recently restarted the thermal cracking unit at Isla, using 18°API Hamaca crude imported from Venezuela in October. The refinery had been mostly off line for two years because of a shortage of feedstock, maintenance and utility services.

PdV’s access to its other Dutch Caribbean assets on Aruba, Bonaire and St Eustatius has been mostly severed. Local governments have long sought to eject the Venezuelan company for failing to maintain the assets and follow through on its commitments.

The US imposed oil sanctions on Venezuela in late January 2019, compounding financial sanctions first levied in 2017. Maduro blames the sanctions for creating hardship and undermining the oil industry.

In recent days, Venezuela’s US-backed political opposition has openly fractured over corruption allegations, casting doubt over the endurance of self-declared interim president Juan Guaido.

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