December 29, 2016 / 6:25 PM / 7 months ago

France's Technip, Venezuelan firms tapped to refurbish Aruba refinery

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ORANJESTAD/HOUSTON, Dec 29 (Reuters) - A consortium formed by France's Technip and Venezuela's Tecnoconsult and Y&V Group was picked to refurbish Aruba's 225,000-barrel-per day refinery, the Caribbean island's government said on Thursday.

The facility will be overhauled in a $700 million project that is expected to take 18 months starting in early 2017. It has been idle since 2012 when it was shut by the previous operator, U.S. Valero Energy.

"The refinery's refurbish project will start in the short term, including inspections, rehabilitation and preparation for the restart," Aruba's economy minister, Richard Arends, said in a speech broadcast on local television.

The Aruba refinery's new operator, Venezuelan-owned Citgo Petroleum, plans to process up to 209,000 barrels per day (bpd) of Venezuelan diluted crude for shipment to its U.S. Gulf refineries in Corpus Christi, Texas, and Lake Charles, Louisiana.

Citgo, a unit of Venezuela's state-run oil company Petróleos de Venezuela S.A., or PDVSA, did not immediately respond to a request for comment. Neither did Tecnoconsult, Y&V or Technip.

In November, Citgo's unit in Aruba shortlisted the Technip consortium and another group formed by Japan's JGC Corp and Spain's Pentech to do the revamp.

Earlier this year, the government of the Caribbean island signed a 25-year lease with Citgo that would allow the new subsidiary Citgo Aruba Refining (CAR) to operate the refinery and an attached terminal.

Supplies to the Caribbean have been a key part of PDVSA's exports for more than a decade, after numerous island nations reached agreements with Venezuela for financed oil. However, its cash flow problems and declining production have caused disruptions, cutting crude shipments to the region.

The company is expecting the Aruba refinery to help curb its diluent shortage, which has limited its ability to formulate exportable crude blends.

Citgo in August asked its parent company to provide an initial investment of $100 million, but a larger credit will be needed to fund the project, according to a internal document seen by Reuters in September.

A source from a bidding firm, who was not authorized to speak to the media, said on condition of anonymity this week that financial group Rothschild was acting as Citgo's advisor for the credit.

Reporting by Sailu Urribarri in Oranjestad, Marianna Parraga in Houston and Alexandra Ulmer in Caracas; Editing by Richard Chang

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