Published On: Thu, Dec 20th, 2018

PDVSA hopes to retain Bullen Bay terminal, not refinery

BullenbaaiWILLEMSTAD – The Venezuelan state-owned PDVSA hopes to retain access to Bullen Bay terminal after its lease expires in December 2019, but the Isla refinery at Schottegat has lost strategic value for the company. This is according to sources within the Venezuelan company.

The refinery barely operated in 2018 because of a lack of feedstock, maintenance and domestic utility services. Normally the facility processed around 220,000 b/d.

A senior Venezuelan energy ministry official said PDVSA no longer has any commercial or financial interest in the refinery. "Isla has lost its strategic importance as a refining center for our company," the official said. "PDVSA can't supply the crude Isla needs, can't afford imported crude from other suppliers and doesn't have the financial resources to maintain the refinery even in nominal operating capacity."

"Bullen Bay is very important to PDVSA's export logistics, but PDVSA isn't interested in spending up to $3bn to upgrade the refinery," official added.

Bullen Bay is a critical transshipment hub for PDVSA's export operations, particularly involving shipments to China, India and close ally Cuba. PDVSA also leases storage on the other Dutch Caribbean islands of Aruba and St Eustatius and owns the 10mn bl Bopec storage facility on Bonaire.

The value of the logistical network was highlighted in May, when US independent ConocoPhillips imposed pre-judgment attachments on PDVSA's Dutch Caribbean assets to force the company to honor a $2bn arbitration award for the 2007 takeover of the US firm's Venezuelan assets. PDVSA reached a settlement with ConocoPhillips in August and has complied with an initial $500mn cash and in-kind payment, the US company confirms. PDVSA is otherwise in default on billions of dollars in bond, commercial and arbitration debt.

PDVSA’s export operations would be significantly impaired if it loses access to Bullen Bay, according to a company official at the main Venezuelan oil terminal of Jose. PDVSA lacks sufficient domestic storage and terminal capacity to compensate for a potential loss of access to Curaçao, although continued access to Bopec, Aruba and NuStar's St. Eustatius terminal would soften the blow.

Venezuela's current production of just over 1mn b/d and significant oil-backed debt commitments and barter deals leave little room to supply crude to Curaçao, the Venezuelan officials say.

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