Venezuela’s struggling oil company PDVSA plans to resume operations
at its Isla refinery on Curacao, a company official who wished to remain
unnamed told S&P Global Platts.
The
refinery has a nameplate capacity of 335,000 but its actual throughput
is a maximum of 270,000-290,000 bpd. It is operated by a local company,
Rafineria di Korsou, “under the direction of PDVSA,” according to the
company official.
The refinery has suffered its share of the
fallout from the U.S. sanctions against Venezuela with scarcity of
feedstock forcing all but the suspension of operations. This, in turn,
has made the Curacao autonomous government, with which PDVSA has a
contract for the operation of the refinery, to look for an alternative
operator.
As a result of all
this, Isla is facing bankruptcy: "PDVSA will have to make the decision
to send some 3 million barrels of crude to generate cash flow to cover
expenses from September to December 2019 or send $60 million to honor
the contract and avoid claims,” the company official told S&P Global
Platts. "If not, Isla will have to declare force majeure and
bankruptcy. The refinery is now totally paralyzed. PDVSA promised the
reactivation and offered to supply crude in July but through an
intermediary."
The Isla refinery received an exemption
from the January sanctions the U.S. slapped on Venezuela. Under the
exemption, the refinery can continue working with U.S. companies until
January 15, 2020 but it has not helped it much, it seems. On top of all
its other troubles, it was also targeted by ConocoPhillips in an asset seizure move against PDVSA.
The
scenario with PDVSA sending crude for the refinery is the less likely
one, as another company official explained. "For PDVSA the refinery has a
low priority. Crude production in Venezuela has decreased
significantly. In this scenario, sending crude to Curacaco makes no
sense, especially when you take in to account that PDVSA cannot sell
products from Curacao because of the embargo."
For Curacao,
however, the refinery is high priority: it accounts for a tenth of the
island’s GDP and a solid portion of its employment.
By Irina Slav for Oilprice.com
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