Curaçao refinery holding “Refineria di Kòrsou” and Project Management Organisation (PMO) held an information session for Isla refinery personnel. The new international sulphur norm for maritime fuel that goes into effect next year offers a window of opportunity for Isla after the current lease contract with “Petroleos de Venezuela” PDVSA ends on December 31.
WILLEMSTAD--The general impression of interested parties on the installations of the Isla refinery in Curaçao, the ability to do business and the quality of the available workforce is positive. Nevertheless, the number of candidates to take over the plant’s exploitation is low
The employees heard this recently during two information sessions organised by government-owned holding “Refineria di Kòrsou” and the Project Management Organization (PMO) which was specifically set up in connection with the search for a new operator in less than six months.
From the responses to date, it can be concluded that the first three years of IMO 2020 (International Maritime Organization) would be the main reason for taking over the operation. This concerns the permitted sulphur in fuel for emission reduction on sea-going vessels. Isla can produce fuel oil that meets the new standard.
However, there is no interest in immediately investing billions in order to upgrade installations. The investments needed to keep Isla operational in the long term require feasibility studies by the operator.
There is much interest in operating the related oil transhipment and storage facility at Bullenbaai. “However, around 50 people work there,” said the holding, to illustrate that in terms of employment the terminal provides only a fraction of the approximately 1,000 jobs at the refinery.
Parties are being told that Isla, Bullenbaai and the Curaçao Refinery Utilities (CRU) powerplant that services the refinery are a total package on offer.
So far there have been two visits from candidate operators with code names “Klara” and “Fiona.” More visits are expected in the coming weeks. Ten so-called “process letters” have been issued to guide the making of a “non-binding proposal.”
It is expected that around five such offers will be received no later than July 15. The selection and signing of the Letters of Intent (LOI) will then take place at the end of July or the beginning of August, after which the binding proposals must be received by the end of September.
The preferred candidate will be chosen at the end of September and otherwise at the beginning of October, followed by negotiations in October and November so that a contract can be signed in November or possibly earlier.
The plans focus on three possible models of partnership: a lease contract (similar to PDVSA); a joint venture between the holding and another party; or sale of the oil installations while the property remains in the possession of Curaçao.
If the holding wants to take over exploitation itself, a large amount of capital will be required – at least US $500 million to guarantee the supply of crude oil. Working capital and personnel will also be required.
Although the latter is available, the amounts involved are just too large for the government-owned company and Curaçao, which is already struggling with financial deficits.