Page 5 - LatAmOil Week 26

LatAmOil COMMENTARY LatAmOil

The role of COVID-19 1985, when it signed a rental agreement with the
Meanwhile, Limetree Bay Ventures appears to local government. It then went on to renew the
be much less concerned about the pandemic. document repeatedly, but it finally let the agree-
Brian Lever, the company’s president, told ment come to an end on December 31, 2019.
Reuters late last month that repair work at the By that time, RdK had already been in nego-
refinery had remained on schedule, even after tiations with the Klesch Group, a privately held
a number of workers at the plant developed German industrial commodities firm, for sev-
COVID-19 infections in March. “We’ve man- eral months. The two sides began talks on an
aged through it extremely well,” he said. “We’ll asset purchase and sale agreement (APSA) after
be starting up in the next few weeks.” the former named the latter as the winner of a
Lever acknowledged, though, that Limetree bidding contest.
Bay Ventures had yet to wrap up negotiations RdK has said it expects Klesch to make the
with the USVI Department of Planning and Isla refinery viable again. The plant operated far
Natural Resources (DPNR) and the US Justice below capacity, handling only about 270,000-
Department (DoJ) on changes made to a con- 290,000 bpd of crude, for years. It then remained
sent decree that dates back to 2011. The plant essentially idle in 2019, partly because its associ-
cannot be restarted unless these two agencies ated utilities plant, known as Curaçao Refinery
reach agreement with the investors, DPNR Utilities (CRU), was not supplying steam and
commissioner Jean-Pierre Oriol told the news partly because the PdVSA had few options for
agency. delivering feedstock.
Meanwhile, there are some positive signs. For Klesch Group has indicated that it will need
example, Reuters indicated that the Limetree time to bring the refinery’s processing units back
Bay refinery had already secured feedstock. An companies that need a place to put their crude “
on stream. In the meantime, RdK is hoping to
oil trader familiar with the matter told the news make the plant’s storage facilities available to Limetree Bay
agency that BP had delivered about 725,000 bar- Ventures says
rels of Colombian heavy crude oil to St. Croix for oil. (World inventories have been mostly full in
transfer to the plant in April. recent months, largely because the pandemic repair work has
The refinery will need more than feedstock, has cut into fuel and energy demand.)
however. It will also need customers – and it may remained on
have trouble on that end, given that it has been Labour unrest
betting on its ability to supply cruise lines and Last week, RdK told Argus Media that it was schedule, despite
other marine operators working in the Carib- close to striking a deal for the storage facilities. the pandemic
bean Sea with fuel that complies with IMO 2020 It did not name any potential customers but said
specifications. These new standards, set by the it was “finalising negotiations with interested
International Maritime Organisation (IMO), parties.”
took effect on January 1. They limit sulphur con- Around the same time, though, Argus
tent in marine fuels to 0.5%. Media hinted that the Isla refinery’s fate might
Jenifer O’Neal, director of the USVI Office of be affected by a wave of civil unrest in Curaçao.
Management and Budget (OMB), noted in late The unrest stems from the Dutch government’s
May that marine traffic had dropped substan- decision to tie coronavirus-related financial aid
tially following the introduction of public health to the island to salary cuts for public employees.
measures aimed at containing the coronavirus. The decision has sparked demonstrations and
“The facility’s reliance on demand from riots.
cruise ships may also prove a near-term vulnera- Meanwhile, a number of the refinery’s work-
bility if the industry is unable to quickly rebound ers have been laid off or have had their hours
following the pandemic,” she was quoted as say- reduced since the spring. Some of these redun-
ing by the Virgin Islands Consortium. dant workers are now joining in the protests,
according to Argus Media.
Isla refinery So far, the unrest has not affected the refin-
The other facility, known as the Isla refinery, is ery, the CRU plant, the Bullen Bay terminal or
located on Curaçao and controlled by a state-run any related facilities. Nevertheless, further lay-
company, Refineria di Korsou (RdK). offs and protests could force Klesch to revise its
PdVSA became the operator of the plant in timeline for restarting operations at the plant. ™

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