May 25, 2020 [Argus Media] – Two Dutch Caribbean islands are offering leases for up to 25mn bl of oil storage after Venezuela’s national oil company PdV was forced to pull out.

Curacao has started a tender process to lease storage at Bullen Bay once it completes repairs, upgrades equipment and meets regulatory requirements, including fire safety and oil spill response plans, according to the island’s state-owned Refineria di Korsou (RdK).

RdK will invest 5mn guilders ($2.7mn) to get the storage into shape over the next six weeks, according to the company’s director Marcelino de Lannoy, who highlighted the global need for oil tanks in the current market.

PdV, which operated Bullen Bay and the associated 335,000 b/d Isla refinery since the 1980s, had largely abandoned the assets before its lease expired in December 2019.

Only 6mn of 15mn bl of storage capacity is currently usable because PdV had not kept up maintenance, RdK says.

The Isla refinery remains idle after Curacao’s hope to seamlessly start a new lease with German refiner Klesch early this year was dashed. According to RdK, negotiations with Klesch have been extended to December.

Elsewhere in the Dutch Caribbean, RdK in March seized the shares of Propernyn BV, a PdV-owned company in the Netherlands that owns the 10mn bl Bopec terminal on Bonaire over unpaid debt. The current status of the facility is unclear, but it had long been under scrutiny by Dutch authorities because of neglected maintenance.

Aruba is currently evaluating bids for a lease of 10 tanks with 6.4mn bl of storage, with another seven tanks with 4.2mn bl of capacity under repair, after PdV’s US holding company terminated a lease and refinery project.

The project, which was managed by PdV’s US refining arm Citgo, was centered on the refurbishment of a former Valero refinery to upgrade Venezuelan heavy crude.

Aruba expects to award a storage contract in June.

The Caribbean lease offerings come at a time of market oversupply owing to collapsed demand caused by the Covid-19 pandemic. Among the parties that have been exploring Caribbean storage options is Colombia’s state-controlled Ecopetrol, which has been supplying crude to some of PdV’s former Asian clients.

The islands were part of PdV’s once bustling near-shore logistical network that it utilized to store and transship cargoes for long-haul destinations. The company lost the assets through debt-related asset seizures, US oil and financial sanctions, and a decline in oil production capacity at home that dried up feedstock for Isla.

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