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Talks Resume Between Curacao Government and China Over Isla Refinery

ISLA REFINERY IN CURACAO

WILLEMSTAD — Dutch-controlled Curacao and China’s state-run Guangdong Zhenrong have resumed suspended talks on a lease and upgrade of the island’s 325,000 barrels per day Isla refinery, Curacao government officials told the Virgin Islands Free Press.

The MAN party that won Curacao’s general election in October 2016 had asked the government to suspend the talks with Guangdong Zhenrong until it took office last month in December 2016.

Guangdong Zhenrong and the government agreed in principle in November 2016 to implement a $5.5 billion project to upgrade the refinery that is now managed by Venezuela’s state-run oil company Petróleos de Venezuela, S.A (PDVSA).

PDVSA’s lease expires at the end of 2019.

“The discussions have resumed and the government has been given documents indicating Guangdong Zhenrong can meet its obligation to finance 85 percent of the project with support from the China Development Bank,” one local official said. “We are confident in the company’s ability to deliver this project.”

But there are indications of tension in relations between Guangdong Zhenrong and PDVSA.

The Venezuelan company uses the refinery to process its crude into gasoline, naphtha, diesel, jet fuel, asphalt, base oils and lubricants, and to blend its diluted extra-heavy crude with light crude for export, partly to China.

The Chinese firm wants Venezuela to continue supplying the refinery after 2019, and has asked Curacao’s government to mediate its discussions with PDVSA.

“This should not be seen as a problem between the companies,” a government official said. “They need to get to know each other, and we are in a good position to ensure successful discussions and a smooth transition to the Chinese firm when PDVSA’s lease dies.”

Guangdong Zhenrong has not responded to a request from Argus for details. PDVSA has not commented.

The Chinese firm will give the government its development plan for the refinery by the end of April, and has until the end of June to sign a 40-year lease agreement starting in 2020, the Curacao officials say.

In addition to upgrading the refinery, Guangdong Zhenrong plans to expand oil storage and build a regasification terminal.

Curacao is 65km off Venezuela’s coast.

Isla is currently off line until 9 February for programmed maintenance.

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The Author

John McCarthy

John McCarthy

John McCarthy is primarily known for his investigative reporting on the U.S. Virgin Islands. A series of reports beginning in the 1990's revealed that there was everything from coliform bacteria to Cryptosporidium in locally-bottled St. Croix drinking water, according to a then-unpublished University of the Virgin Islands sampling. Another report, following Hurricane Hugo in 1989, cited a Federal Emergency Management Agency (FEMA) confidential overview that said that over 40 percent of the U.S. Virgin Islands public lives below the poverty line. The Virgin Islands Free Press is the only Caribbean news source to regularly incorporate the findings of U.S. Freedom of Information Act requests. John's articles have appeared in the BVI Beacon, St. Croix Avis, San Juan Star and Virgin Islands Daily News. He is the former news director of WSVI-TV Channel 8 on St. Croix.

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