Page 4 - LatAmOil Week 26

LatAmOil COMMENTARY LatAmOil

A tale of two refineries

Two Caribbean plants formerly owned by PdVSA are facing challenges

VENEZUELA’S national oil company (NOC) a storage and transshipment facility.
PdVSA has lost or given up control over most Even so, it has not escaped notice. Hovensa
WHAT: of its foreign downstream assets within the last did eventually sell the facility and associated
The Limetree Bay and Isla decade. These losses are partly the result of the infrastructure to two US-based entities, Free-
refineries face obstacles US government’s imposition of stricter sanc- point Commodities and ArcLight Capital Part-
as a result of recent tions on Venezuela in early 2019, but in some ners, in 2016.
events. cases they predate the sanctions regime. Freepoint and ArcLight then set up a com-
In any event, some of the downstream facili- pany called Limetree Bay Ventures to manage
WHY: ties that are no longer under PdVSA’s control are these assets, saying they intended to resume
Limetree Bay Ventures having difficulty adjusting to their new opera- operations at the refinery. When they secured a
has revised its schedule tors. This essay will examine the challenges fac- financing deal and brought EIG Global Energy
for work in USVI, and RdK ing two oil-processing plants in the Caribbean Fund and other new shareholders on board
is looking for ways to use region. in late 2018, they said they intended to bring
the Isla plant’s storage 200,000 bpd, or more than 57% of the plant’s
capacities. Limetree Bay Ventures design capacity, back on stream in late 2019.
The first is the Limetree Bay refinery near St. Later, they said they would have to wait until
WHAT NEXT: Croix in the US Virgin Islands (USVI). early 2020 because metal corrosion and other
Weak demand and labour This 350,000 barrel per day (bpd) facility was issues had slowed the pace of work and driven
unrest could further previously owned by Hovensa, a joint venture the cost of repairs up by about $1bn.
hamper the refineries. set up by Hess (US), a US-based independent, Despite the delay, they missed that deadline
and PdVSA. Hovensa shut the refinery down because of the coronavirus (COVID-19) pan-
in 2012 and then declared bankruptcy in 2015 demic and pushed the start date back to July 1.
before agreeing to sell it. Last month, USVI officials said that the opening
Since then, the plant has mostly been used as might have to be postponed again to October 1.

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