Published On: Tue, Jan 9th, 2018

Update: Venezuelan ties to oil-linked isles further sour

CARACAS, WILLEMSTAD - Venezuela says it will not reopen its air and sea borders with the islands of Aruba, Bonaire and Curacao until the local authorities implement measures to halt smuggling of coltan, diamonds and gold mined illegally in the South American country.

The move ratchets up tensions between Caracas and the islands that have been deteriorating for months.

The islands have oil refineries and storage facilities historically tied to Venezuelan state-owned oil company PDVSA. Although the oil-related links, which bring vital revenue to the islands, are not officially part of the air and sea closure, tensions over PDVSA’s lack of maintenance and investment has long been a source of friction.

The latest sign of rising tensions coincides with a visit by the Dutch Undersecretary for Kingdom Relations with the islands, Raymond Knops, who left Bonaire for Curacao today before traveling to Aruba.

The border closure that president Nicolas Maduro imposed on January 5, and which was supposed to last for just 72 hours, will remain in effect "indefinitely until island authorities hold a high-level meeting with Venezuela to combat the mafias stealing and smuggling our strategic resources with impunity," Venezuelan executive vice president Tareck El Aissami said on Twitter this morning.

The Venezuelan government "will not allow further aggression from these criminal organizations," he added, without elaborating.

The vice president's office and foreign ministry declined to provide details.

PDVSA operates Curacao's 325,000 b/d Isla refinery under a lease that expires at the end of next year. Under pressure to clean up environmental damage and improve the ageing refinery, PDVSA has signaled it does not plan to extend the arrangement that would imply further investment.

Curacao´s plan to sign a new lease and set in motion an upgrade of the refinery with Chinese state-owned Guangdong Zhenrong Energy (GZE) recently collapsed, raising the possibility that the revenue and jobs-creating refinery could be shut down next year.

Another possible shutdown could happen on Bonaire, where PDVSA owns the 10mn bl Bopec oil storage and export facility. Island environmental authorities have threatened to force a closure of the facility next month unless PDVSA makes critical repairs.

In Aruba, a plan by PDVSA’s US downstream subsidiary Citgo to restart and revamp the 280,000 b/d San Nicolas refinery to process Orinoco extra-heavy crude from Venezuela into intermediate grades that would be shipped to Citgo's US-based refineries has stalled.

Authorities in the three islands have asked The Hague to determine the economic impact of a Venezuelan threat to sever commercial relations.

In Venezuela, all mining activities in Bolivar state are controlled by the defense ministry and the military-owned Camimpeg mining, oil and gas company that Maduro created by presidential decree in February 2016.

Andres Velasquez, a former presidential candidate and senior leader of the Venezuelan indigenous Pemon tribe that lives largely in southeastern Bolivar state, dismissed El Aissami's claim that residents of Aruba and Curacao are responsible for illegal mining and ore smuggling in Venezuela.

"The illegal extraction in Bolivar and subsequent smuggling of valuable mineral resources like coltan to Aruba, Curacao and other nearby islands is carried out almost exclusively by Venezuelan military gangs commanded by corrupt Venezuelan generals appointed to their posts by President Maduro," Velasquez said.

By Jack Sweeney

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