Citgo, Aruba ink deal to restart idled refinery

Citgo Petroleum Corp., an indirect wholly owned subsidiary of Petroleos de Venezuela SA (PDVSA), has reached an agreement with the Aruban government to restart Valero Energy Corp.’s former 235,000-b/d refinery in San Nicolas, Aruba (OGJ, May 28, 2012, p. 22).

Citgo Aruba will invest $450-650 million to transform the refinery into a plant designed for upgrading extra-heavy crude from Venezuela’s Orinoco belt, Citgo and PDVSA said.

Comparable to a large turnaround, the refinery overhaul project will take 18-24 months to complete and will be financed by external sources, said Nelson P. Martinez, Citgo’s president and chief executive.

To be operated by Citgo Aruba under a 15-year lease agreement with a 10-year option to extend, the refinery will have a capacity to upgrade 209,000 b/d of Venezuelan extra-heavy crude into intermediate feedstock for further processing at Citgo’s refineries in the US, Martinez said.

Naphtha recovered at the plant, in turn, will be sold to PDVSA for use as diluent.

Alongside creating an opportunity to increase production from Orinoco belt, the proposed refinery restart also paves the way for a complementary project under consideration involving construction of a 17-mile gas pipeline from Venezuela to Aruba that would deliver excess natural gas from Venezuela’s Paraguana region for use at the upgrader, PDVSA and Citgo said.

While the companies have yet to identify contractors for the project, they did confirm Yokogawa Electric Corp.’s recently acquired subsidiary KBC Advanced Technologies Ltd. and KBR Inc., among other unidentified consultants, participated in an assessment of the project's technical and financial viability.

Citgo disclosed no further details regarding either a proposed startup date for the upgrader or the external sources that will finance the proposed project.

Citing “unfavorable refinery economics and the outlook for continued unfavorable refinery economics,” Valero suspended crude processing operations at the Aruba refinery in March 2012 before converting it into a products terminal (OGJ Online, Sept. 4, 2012; Mar. 19, 2012).

Contact Robert Brelsford at

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