Curaçao announces new candidate to operate old refinery

After years of searching, there may be a candidate to revive the Curaçao refinery. An American/Brazilian consortium with mostly Venezuelan directors will negotiate with Curaçao over the next two months to operate the refinery and manage the oil transfer terminal on the island.

This should lead to a new lease of thirty years and an initial investment of $650 million to start up the refinery. Around 2000 people are needed as labor power in that phase. Once the refinery is put into operation, 800 people should be able to find work there.

Political squabbles

The search for a new operator began as early as 2013, when it became clear that Venezuelan state oil company PdVsA could not renew the lease contract of the old Shell refinery in 2019.

A handful of international and local companies have tried to step in since then, but that kept rebounding to political squabbles in Willemstad and the involvement of the Netherlands. For geopolitical reasons, The Hague saw nothing in the arrival of the first serious takeover candidate, the Chinese state-owned company Guangdong Zhenrong.

The current consortium was registered two weeks ago in the Curaçao Trade Register under the name Caribbean Petroleum Refinery. All but one of the directors of the holding company and operating company are from Venezuela. Almost all of them have a bad relationship with the regime in their motherland. Many therefore live in the United States.

The question is where this consortium will get its oil from. The US sanctions against Venezuela are getting a little lighter, but whether there will be room for the new consortium to get Venezuelan oil is by no means certain, according to Willemstad sources.

On the other hand, the old refinery with Venezuelan or other oil may play a significant role again, now that the increased oil price can make oil refining in Curaçao profitable again.

More active environmental movement

For over a hundred years, the oil industry has made Curaçao a prosperous country. But under Venezuelan management, hardly any more investment was made in the refinery. Curaçao also faced an increasingly active environmental movement.

Isla, as the refinery is popularly called, was able to continue refining for a long time under highly polluting conditions. The company owes this to an environmental permit that it was allowed to draw up itself in the 1990s, and the government did not want to maintain even those very broad standards and the legal power could hardly intervene with existing legislation.

The fear among local residents of the refinery is that the government will again set not too high environmental requirements. A lawsuit sought to comply with international legislation and it has finally been established that the continuation of the refinery is no longer allowed under the old licensing standards.

In

the absence of a proper system of standards, Curaçao is obliged to follow the WHO standards. And these are unfavorable for the way the Isla produced the highly sulphurous heavy oil from Venezuela so far.

Last week, the Clean Air Everywhere action group started a summary lawsuit to remind Curaçaos politics that there is a verdict that instructs the country to apply international standards.