Refineria di Korsou (RdK) and the Klesch Group have signed an Asset Purchase and Sale Agreement setting a firm step toward securing the continuation of the Curacao oil facilities consisting of the Curacao refinery, the utilities plant (CRU) and the Bullenbay Oil Terminal.
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Register Now"The Asset Purchase and Sale Agreement is the first binding agreement signed with Klesch and forms the basis for a long-term relationship between parties," according to a joint press release on December 22.
"Now parties will continue to work to fulfill conditions precedents agreed, with the aim to sign the two remaining agreements for closure in 2020. This is planned to take place in the second quarter of 2020," according to the press release.
The refinery, with the name of Isla, has been operated by Venezuelan state-owner PDVSA since 1985 under a rental agreement with the Dutch Caribbean autonomous government of Curacao. The agreement has been renewed periodically and the current contract expires December 31.
"This agreement signed with Klesch and forms the basis for a long-term relationship between parties. The remaining documents will be finalized and signed in the coming months. The agreement entails sale of the Curacao oil facilities with the land in long lease," the press release read.
In September, Klesh had been selected by RdK as the best offer to negotiate exclusively for a new operating contract.
The Curacao refinery has a capacity to process 335,000 b/d, but in practice this volume is not possible because of infrastructure limits. The maximum throughput is estimated at between 270,000-290,000 b/d, depending on the type of crude. In 2017 and 2018, the refinery was impacted by failures in its industrial services functions, by a fire that occurred in the CD-3 distillation unit and by the lack of crude availability.
In the last 12 months, the processing level has been nearly zero owing to the lack of the supply of steam from an industrial service plant and embargos against PDVSA crude shipments, according to previous reports.
The industrial services plant called Curacao Refinery Utilities (CRU) is property of the Curacao government. CRU delivers electricity to the refinery and the Curacao community.
The Bullenbay terminal with a storage capacity of 17.8 million barrels of crude oil and refined products, is the third-largest in the Caribbean, after St. Croix in the US Virgin Islands and Borco terminal in the Bahamas.
According to previous reports, in Bullenbay PDVSA made a substantial investment in changing the floating roofs of several tanks and built heating facilities to store Boscan heavy crude. The project was completed in 2017, but has not been used. This high-capacity storage terminal is strategic because of its location, depth of docks to receive super tankers and possibility of ship-to-ship transfers.
No additional data was available on the amount of investments, plan to restart operations and origin of the future supply of crude oil to be processed.
In May, the US Treasury Department had exempted Curacao refinery from sanctions against PDVSA. Treasury issued a general license allowing operations to continue at the Refineria di Korsou NV, Curazao Refinery Utilities BV and Curoil NV. Companies can continue dealing with the refinery, and its US partners will be exempt from the PDVSA sanctions until January 15, 2020, according to previous reports.
US sanctions imposed in January effectively ban US imports of Venezuelan crude and block exports of US diluent to Venezuela.
The Klesch Group is a privately owned international industrial commodities group with investments principally in the oil sector through Klesch Petroleum Holding Limited.
PDVSA did not immediately respond to a request for comment.
-- Newsdesk-Venezuela, newsdesk@spglobal.com
-- Edited by Gary Gentile, newsdesk@spglobal.com