Mérida, December 2, 2019 (venezuelanalysis.com) – Venezuela’s state-run oil company PDVSA has managed to temporarily extend its lease on Curacao’s Isla Refinery.
Venezuela’s PDVSA Secures Temporary Lease Extension for Curacao Refinery
Despite the extension, refinery owners are looking to end the 34-year cooperation under pressure from US sanctions.
Dec 2nd 2019 at 6.41pmThe agreement will allow PDVSA to continue to use the refinery for a maximum of one additional year as part of a “transition” to a new operator, according to a statement from the state-run refinery owner Refineria di Koursou (RdK) on Sunday.
The deal was reached during a meeting between PDVSA President Manuel Quevedo and RdK representative Marcelino de Lannoy in Caracas Saturday, and reportedly includes a commitment by PDVSA to invest in maintenance during 2020.
Sitting a mere 140 kilometres of Venezuela’s northern coast, the Isla Refineryhas a capacity to process 335,000 barrels per day (bpd) of crude oil into conventional fuels, polymers, petrochemicals, asphalt and raw waxes, as well as lubricating oils. It also provides storage facilities for Venezuelan oil-based products.
PDVSA has leased the premises continuously since 1985, but RdK is considering switching operators to avoid coercive measures from Washington. The firm began talks with European industrial conglomerate Klesch Group in September, but no further details have yet been disclosed.
Despite a modest rise in output in October, Venezuela’s oil production continues to be less than half that of 2018, with bottlenecks reported in processing, distribution, and sales in recent months as US sanctions continue to bite.
The Trump administration first imposed crippling financial sanctions on the industry in 2017, going on to decree an oil embargo last January, prohibiting US entities from dealing with PDVSA.
Sanctions were further expanded to a blanket ban on dealings with the Venezuelan state in August, which threatened secondary sanctions against third party actors.
Since, the US Treasury Department has directly targeted non-US, Caribbean-based shipping firms working with PDVSA, in a bid to further hamper Venezuelan crude exports
In May, RdK was granted a sanctions exemption from the US Treasury’s Office of Foreign Assets Control (OFAC), which allowed the firm to continue working with PDVSA until January 2020. According to RdK spokespersons, the Washington permit allows for an additional one-year grace period during which the refinery may generate income for maintenance and salaries but not return a profit. Neither PDVSA nor the OFAC have commented on the lease renewal.
ConocoPhillips pushes to seize CITGO
PDVSA is also facing further trouble over its foreign assets in the United States, after US oil company ConocoPhillips filed a lawsuit to seize shares in its CITGO subsidiary last week.
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