Published On: Tue, Mar 18th, 2014

PDVSA sends back MoU with minor changes to the government

oil refineryWILLEMSTAD – The Venezuelan State Oil Company, PDVSA made some corrections to the Memorandum of Understanding and send it back to the Government of Curacao. According to a PDVSA official, these changes and corrections are not fundamental and the MoU can be signed at any moment now.

There are intense deliberations taking place to work out some differences between both parties. One of the issues that are important is the investments in the refinery. Curacao wants 51% of the shares in whichever business structure both parties choose to continue with. There are no differences of opinion on that point.

The changes made in the MoU are not fundamental, which means that it is anticipated that during this week the local committee in charge of the negotiations with PDVSA will meet to discuss the oil company’s changes. If there are no counter arguments, then it is expected that the MoU will be signed as of this week.

The MoU is an agreement which will initiate the negotiations for a superior agreement. Many believe that with the signing of this MoU that everything is done. This is not the case. Both parties will continue with the negotiations, which could be complex and extensive. An example of one of these complicated issues is that the parties have to look for a third party to invest in the refinery. There are Chinese and Russian companies that are interested in participating. According to an official source, there are no companies in the region that are interested in investing in this refinery. One of the companies that were mentioned before was Petrobras, the Brazilian oil company, but the Brazilian government decided not to invest in foreign companies anymore. All their investments will be done in their own country.

Another complicated issue is the importance of modernization of the refinery. This modernization should lead to less pollution. This is important for PDVSA because they have to produce products that comply with international specifications of environmental standards. If they don’t comply with these standards, it will be difficult to find markets for their products.

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