Project Profile
Value: US $450-650 million
Location: San Nicolas, Aruba, 29km off Venezuela\'s coast
Capacity: 235,000 b/d of crude oil
New Upgrade Capacity: 280,000 b/d of extra-heavy crude oil
Lease: 15 years with 10-year option for extension
Historical background
Valero suspended crude processing operations (due to poor refining economics) at the Aruba Refinery in March 2012. When it was in operation, the refinery processed heavy sour crude into distillates and intermediate feedstock. It did not produce finished products. In 2012 China\'s state-run PetroChina had concluded an \"agreement in principle\" with Valero to purchase the refinery. The transaction did not materialize, leading Valero to close the facility.
New Project Proposal
Citgo Aruba will transform the former Valero’s refinery into a plant designed to become logistical base for offshore blending of extra-heavy crude from the Orinoco oil belt with light crude and naphtha. Naphtha recovered at the plant, will be sold to Petroleos de Venezuela SA (PDVSA) for use as diluent. The refinery overhaul project will take 18-24 months to complete and will be financed by external sources.
To be operated by Citgo Aruba under a 15-year lease agreement with a 10-year option to extend, the refinery will have a capacity to upgrade 209,000 b/d of Venezuelan extra-heavy crude into intermediate feedstock for further processing at Citgo’s refineries in the US.
The proposed refinery restart also paves the way for a complementary project under consideration involving construction of a 17-mile (27km) gas pipeline from Venezuela to Aruba that would deliver excess natural gas from Venezuela’s Paraguana region for use at the upgrader.
The Aruba facility is currently used as an oil storage terminal, featuring 63 tanks with almost 12 MMbbl of total storage capacity. The facility also has two deepwater marine docks capable of receiving ultra-large crude carriers and six refined product docks, as well as a truck rack for local deliveries.
Contractors were selected for the US$700 million overhaul project selected in December 2016 to commence work in from early 2017.
This project was delayed by 8 months until financing was in place, and work began in July 2017.
The overhaul work is now expected to see the refinery reach 66% capacity in mid-2020, and will reach full capacity in 2021 according to the central bank of Aruba.
Deals signed
In June 2017, the Aruban government, CITGO Aruba Refining, PDVSA, and key technical partners agreed several key deals including the Aruba Upgrader Project Main Contractor Service Agreement and the Bridge Loan Agreement, designed to streamline and expedite the refurbishing work planned for the facility.
The Aruba Upgrader Project Main Contractor Service Agreement is intended to provide qualified engineering, procurement, project management, and subcontracting services required for the full refurbishment scope of work. This will allow for the hiring of local employees and local service providers.
The deal will be executed between CITGO Aruba, on one hand, and technical service providers Technip France and Y&V Ingeniería y Construction as a consortium, on the other hand.
Operators:
Citgo Petroleum Corp. (an indirect wholly owned subsidiary of PDVSA)
The Aruban Government
Contractors:
KBC Advanced Technologies Ltd. (acquired by Yokogawa) and KBR Inc: Assessment of the project\'s technical and financial viability. (2016)
Consortium of Technip, Tecnoconsult and Y&V Group: refurbishment work. (2016)