Page 5 - LatAmOil Week 29 2020

LatAmOil COMMENTARY LatAmOil

Instead, it indicated that it did not believe it redundant at the end of June. It did so after
could close the deal before the end of 2020. determining that it had no chance of striking a
As a result, negotiations between the parties deal that would allow the plant to restart produc-
collapsed late last week. RdK acknowledged tion before the end of the year.
this development on July 17 and reported that it Additional job losses are likely. As the
intended to look for another investor. The com- Curaçao Chronicle noted on July 18, the refin-
pany will “initiate a new, transparent process in ery does not create jobs merely through direct
search of a new operator for the oil facilities, in hires. Rather, it is also an indirect job creator, as
order to ensure a sustainable future for our refin- it supports other companies that employ several
ery,” it said in a statement. thousand people on the island.
As of press time, RdK had not said whether it
was courting any potential partners. Nor did it Looking into storage “
say whether it would restart talks with past can- Despite these challenges, RdK is still hopeful of Despite its
didates for a deal. Willemstad has already tried obtaining better results from another business
and failed to negotiate a contract with a number venture. challenges, RdK
of companies, including Count (Netherlands), That is, the company – like other Caribbean
Motiva (US/Saudi Arabia) and Quandong downstream facilities formerly owned or man- is still hopeful of
Zhenrong (China), Curaçao Chronicle noted. aged by PdVSA affiliates – is looking to move
forward with plans to lease its storage facilities, obtaining better
Economic impact which are mostly idle. results from its
The breakdown of talks between RdK and At first glance, this appears to be a good plan.
Klesch Group is not good news for Curaçao’s There is certainly demand for extra storage, as effort to lease its
economy, which is already suffering because inventories remain very full around the world.
of the pandemic’s negative effect on tourism Even so, it will also face difficulties on this storage facilities
revenues. front. According to RdK, only 40% of the Isla
For one thing, the Isla refinery has tradition- refinery’s storage capacity – 6mn barrels out of
ally accounted for about 10% of the island’s GDP. a total of 15mn barrels – is currently usable. As
As such, the longer it remains offline, the more such, the company will have to spend money on
money the country loses – and it has already lost repairs and maintenance in order to make the
substantial sums. maximum amount of capacity available. And
During the last few years of PdVSA’s oper- as noted above, it does not have a great deal of
atorship, the plant processed no more than money to spare at the moment.
270,000-290,000 barrels per day of crude, below Additionally, there are other demands on the
its full capacity of 350,000 bpd. It then remained company’s resources. The Curaçao Chronicle
essentially idle in 2019, partly because its asso- reported on July 20 that RdK had been asked
ciated utilities unit, known as Curaçao Refinery to provide ANG30mn ($16.71mn) towards the
Utilities (CRU), was not supplying steam and cost of an ANG60mn ($33.43mn) transition
partly because US sanctions left its Venezue- plan designed to help Curoil reduce its depend-
lan operator with few options for delivering ence on the Isla refinery.
feedstock. Curoil is the national oil company (NOC) of
For another, the Isla refinery and its asso- Curaçao. In its capacity as a crude oil and petro-
ciated facilities have traditionally been among leum product wholesaler, it serves the Dutch
the island’s main employers. However, RdK Caribbean islands of Aruba and Bonaire, as well
RdK, the state-owned company that operates the plant, says talks with Klesch Group have collapsed made 900 employees, or roughly half of its staff, as Curaçao. ™

RdK has been asked to provide financial support to Curoil (Photo: Staal Antillen)

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