(Energy Analytics Institute, Pietro D. Pitts, 11.Jun.2016) – Authorities from the governments of Aruba, the Bolivarian Republic of Venezuela, and officials from Venezuela’s state oil company Petróleos de Venezuela, S.A. (PDVSA) and CITGO Aruba, gathered in Caracas, Venezuela to take part in the execution of a commercial agreement between CITGO Aruba and the Aruban government to reopen a 209,000 barrel per day refinery located in San Nicolas, Aruba.
Officials in attendance at the gathering included: Venezuela’s President Nicolás Maduro, Venezuela’s Oil Minister Eulogio del Pino, Aruba’s Primer Minister Mike Eman; Aruba’s Economy, Communication, Energy and Environment Minister Mike de Meza, and CITGO Petroleum Corporation President and CEO Nelson P. Martínez, reported CITGO in an official statement on its website.
Following several months of negotiations, officials from the Aruban government and CITGO Aruba, announced plans to reactivate operations — which had been idled since 2012 — through a refining facilities 15-year lease agreement, with a 10-year extension option. CITGO Aruba, a group of operating companies under PDV Holding (a PDVSA subsidiary), will operate the facility with CITGO providing services to the group.
“This project will transform the refinery into an upgrader for Venezuelan extra-heavy crude within 18 months to two years. This process — which will require an investment ranging from $450 million to $650 million, to be obtained from external financing sources — can be compared to a large turnaround. This is an area in which CITGO is well positioned to provide technical expertise and services,” Martínez said, adding that with these changes, the refinery would become a successful economic venture for all parties.
“This has been a very well thought-out process which involved the participation of the best available technical consultants from CITGO and PDVSA, as well as the input of several leading international refining industry consulting firms, such as KBC Advanced Technologies, KBR of Venezuela and Aruba continue to evaluate the possible construction of a natural gas pipeline that would link the two countries which are just 17 miles apart …
Germany and others that assessed the project’s technical and financial viability,” Martínez added.
Once the adaptation process has concluded, the facility will upgrade extra-heavy crude from the Venezuela’s Orinoco Heavy Oil Belt or Faja, transforming it into intermediate crude, which in turn will be sent on to the CITGO refining network in the United States of America for further processing, Martínez explained. At the same time, naphtha will be sold to PDVSA for use as diluent for its extra-heavy crude.
A complementary project under consideration would allow the utilization of excess natural gas available in the Paraguaná region of Venezuela. Besides the significant energy cost savings in operations that this would generate, using natural gas would substantially reduce refinery emissions and contribute to environmental protection efforts in the region, the CITGO CEO said, adding that the construction of a gas pipeline linking the coasts of Venezuela and Aruba, which are just 17 miles apart, is being evaluated towards this end.
“This is a very strong project from both the technical and financial perspective. It is a strategic partnership that will benefit CITGO Aruba, PDVSA, Venezuela and Aruba through operations that reduce costs in terms of transportation, energy and storage needs, fully utilize existing infrastructure and maximize the benefit of extra-heavy crude oil production from the Orinoco Oil Belt, the largest oil reservoir in the world,” Martínez concluded.