Citgo Drops Aruba Refinery Project, Island Balks

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(Argus, 13.Jan.2020 — Citgo, the US refiner that Venezuela’s political opposition nominally wrested from the Opec country’s national oil company PdV in 2019, is abandoning a refinery project in Aruba, sparking fury on the Dutch-controlled island.

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In a 27 December letter obtained by Argus, Citgo Aruba Refining (CAR) told workers that US sanctions on PdV imposed in January 2019 “have impacted not only the CAR refurbishment/upgrader project but also resulted in severe financial hardship restricting the ability to continue support of day-to-day operations.” As a result, the company will cease operations and terminate its working agreements as of 30 January 2020, the letter states.

Aruba, a tiny island that once formed part of PdV’s strategic logistical network in the Dutch Caribbean, is crying foul.

CAR, a subsidiary of Delaware-based Citgo Aruba Holding (CAH) and an indirect subsidiary of Delaware-based PdV Holding (PDVH), has missed lease payments on the refinery and associated oil terminal since March 2019, taxes have not been paid since 2017, refinery maintenance has been neglected, and now the company is shirking its labor obligations, a senior official close to the Aruban government tells Argus. “This is a horrible abuse,” the official said.

None of some 70 local workers affiliated with two unions have signed the proposed severance package, union leaders say. The Aruba Labor Federation (FTA) is reaching out to Citgo chairman Luisa Palacios today to insist on payment of labor debts and sustained employment at the terminal, which it says continues to operate. The independent oil workers’ union, IOWA, plans to take Citgo Aruba to court under Dutch jurisdiction.

The terminal, where CAR imports fuel for the minuscule local market, is of particular local concern if the company is allowed to leave Aruba at the end of this month.

The Aruban government has tried since last year to repossess the refinery and terminal under a proposed temporary suspension agreement between Aruba-owned local refinery owner RDA and CAR. But the two sides failed to strike a deal, and CAR has impeded RDA from accessing the facilities. Citgo has not responded to a request for comment. CAR’s top executive Joe Crawford could not be reached.

The government says it has not been formally apprised of CAR’s decision to withdraw, but it is demanding that the company comply with all labor obligations.

The dispute opens a thorny new legal front for Venezuelan opposition leader Juan Guaido, who is recognized by dozens of Western countries, including the Netherlands, as interim Venezuelan president in place of Nicolas Maduro. Despite US sanctions that the White House augmented today with targeted penalties on Guaido’s National Assembly rival Luis Parra and his allies, the Maduro government has not fallen.

In the heady weeks after the White House recognized Guaido’s interim government in January 2019, Citgo’s board shifted into opposition hands, giving Guaido’s parallel government administrative control over 750,000 b/d of US refining capacity but without direct access to the refiner’s revenue.

Under a vaunted US-backed administrative structure meant to underpin a future political transition, Citgo is now governed by an “ad hoc” PdV board in exile headed by veteran PdV executive Luis Pacheco. The main task of the ad hoc PdV board is shielding Citgo, Venezuela’s most valuable overseas asset, from myriad creditors, including jilted PdV bondholders and arbitration claimants that are pressing their cases in US courts.

Now the Guaido-appointed board is facing a separate conflict in Aruba, where it reluctantly inherited a project that it would have quietly preferred to leave in Maduro’s hands. “It would be nice to have this asset, but it is not one of our priorities,” a member of the ad hoc PdV structure tells Argus, blaming scarce resources.

One of the Aruban union leaders laments that Guaido is not helping the workers even though they helped to eject Maduro’s CAR managers.

“We got Maduro’s people out with the hope that Juan Guaido would help us,” the union boss said.

Under a long-term lease signed in 2016, CAR was supposed to refurbish the 235,000 b/d San Nicolas refinery that was previously owned and operated by US refiner Valero. The ambitious $600mn-$700mn project would have included a 110km subsea natural gas pipeline from Venezuela’s Tiguadare gas treatment facility to run the complex that includes its two cokers. Under that agreement, around 209,000 b/d of diluted crude oil (DCO) from Venezuela’s Orinoco heavy oil belt would have been upgraded into 125,000 b/d of 22.5°API synthetic crude with 1.2pc-1.5pc sulfur. The stripped-out naphtha would have been recycled back to Venezuela, with the sulfur and coke sold.

By Patricia Garip

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  139. Today, I went to the beach front with my children. I found a sea shell and gave it to my 4 year old daughter and said “You can hear the ocean if you put this to your ear.” She placed the shell to her ear and screamed. There was a hermit crab inside and it pinched her ear. She never wants to go back! LoL I know this is totally off topic but I had to tell someone!

  140. Hi there! I know this is kinda off topic but I was wondering which blog platform are you using for this website? I’m getting sick and tired of WordPress because I’ve had problems with hackers and I’m looking at alternatives for another platform. I would be fantastic if you could point me in the direction of a good platform.

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  146. Hi! Quick question that’s completely off topic. Do you know how to make your site mobile friendly? My web site looks weird when browsing from my iphone 4. I’m trying to find a template or plugin that might be able to fix this issue. If you have any suggestions, please share. Thank you!

  147. Hey there! This is kind of off topic but I need some advice from an established blog. Is it very hard to set up your own blog? I’m not very techincal but I can figure things out pretty fast. I’m thinking about creating my own but I’m not sure where to start. Do you have any ideas or suggestions? Thank you

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  157. Hi! I realize this is kind of off-topic but I needed to ask. Does operating a well-established blog like yours require a lot of work? I’m completely new to blogging however I do write in my diary everyday. I’d like to start a blog so I can share my personal experience and feelings online. Please let me know if you have any suggestions or tips for brand new aspiring bloggers. Thankyou!

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  160. Hi! This is kind of off topic but I need some help from an established blog. Is it difficult to set up your own blog? I’m not very techincal but I can figure things out pretty quick. I’m thinking about creating my own but I’m not sure where to start. Do you have any tips or suggestions? Appreciate it

  161. Good day! I know this is kinda off topic however , I’d figured I’d ask. Would you be interested in trading links or maybe guest authoring a blog article or vice-versa? My site addresses a lot of the same topics as yours and I feel we could greatly benefit from each other. If you’re interested feel free to send me an email. I look forward to hearing from you! Excellent blog by the way!

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  176. My coder is trying to convince me to move to .net from PHP. I have always disliked the idea because of the costs. But he’s tryiong none the less. I’ve been using WordPress on a variety of websites for about a year and am concerned about switching to another platform. I have heard excellent things about blogengine.net. Is there a way I can transfer all my wordpress posts into it? Any help would be really appreciated!

  177. Having read this I thought it was really enlightening. I appreciate you taking the time and energy to put this content together. I once again find myself spending a significant amount of time both reading and commenting. But so what, it was still worthwhile!

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