According to Wikipedia: The Petroleum industry in Guyana is rapidly evolving. Guyana has emerged as one of the newest petroleum producing regions in the world, achieving its first commercial grade crude oil draw in December 2019. NOTE: Crude oil is sent abroad for refining.
Since the onset of production, Guyana has experienced a rapid increase in oil output, with production levels reaching approximately 645,000 barrels per day by 2024. With plans to further increase production to about 1.3 million barrels per day by 2027, Guyana is set to significantly expand its influence in the global oil market, presenting new economic opportunities and challenges for the country.
Aruba, Curacao & Trinidad & Tobago are neighbors. What do the three have in common? Our refineries are mothballed and closed, and Guyana needs them.
(There are TEN mothballed refineries in the region, including St Croix, Honduras and Guatemala.)
These day T&T is making efforts to get its shuttered oil refinery re-opened in time for when the Guyana offshore oil production reaches the oil production level where Venezuela USED to be at the time when the Aruba and Curacao oil refineries were built.
That should take Guyana another 5 or 6 years.
One of my friends, a refinery watcher, swears that the owners of idle refineries in the region are running circles around the moon trying to secure some of the oil bonanza flowing from Guyana. They are attracting bidders from around the world, to help open their refineries. An article from three days ago, stated that T&T Petrotrin refinery has received proposals from nine potential bidders, and their government now has to evaluate which is a good fit.
The bidders are bidding on a cat in a bag, because the refinery has been closed since 2018, rustily falling apart, similarly to Aruba and Curacao. One of the bidders indicated that three to five years ago it could have cost between US$400 and 500 million dollars. Now it would be about US$1 billion, and it would take up between three and five years to restart, if at all.
But when you take into consideration that Guyana will need more storage tanks and more of everything since its oil industry is exploding, it makes sense to wake up to the possibilities, NOT for the refinery, but for our terminal, sitting at the edge of a deep-water harbor, in St Nicolas, capable of welcoming ultra large crude carriers. And if it’s true that the T&T oil storage and transshipment terminal will not be included in this potential deal with the refinery reopening, then Aruba stands a chance to profit.
Also from the same article the mention that Jindal Steel and Power, JSP, one of India’s leading steel manufacturers, with a significant presence in steel, power, mining, and infrastructure, showed interest in the T&T refinery. And my refinery watcher friend reports that they also visited Curacao.
While Jindal’s company is an important player in India, it is involved in some legal complications and the opposition party in T&T expressed its concerns over a possible deal, and that is probably why Jindal went to Curacao. His plan B.
He did not visit Aruba.
The following is an article by an energy consulting advisory, from a few years ago, but history buffs would enjoy reading it, as it provides a historical overview of Isla Refinery in Curacao, RDA here, and Petrotrin in T&T.
The refining industry in the sunny (but sometimes very stormy) Caribbean, is always a subject of conversation in government circles. Refineries found in the Caribbean islands have in past years been a very important source of refined product not only within the region but also for the Eastern Seaboard of the U.S. But just as frequent tropical storms interrupt the idyllic beach weather, market trends and “squalls” have also wreaked havoc with the refineries throughout the region. In fact, as we noted, all the facilities have been closed in recent years. While changing market conditions and the structural disadvantages of operating refineries in an island environment have played a major part in these closures, self-inflicted wounds, including poor management, lack of capital and corruption also played important roles in the failures. Although all these challenges still remain, attempts are being made to restart several of the major refineries in the region. Efforts are constantly being made to start up important refineries found on the islands of Aruba, Curacao and Trinidad.
Curacao
In 1915, shortly after oil was discovered in the Lake Maracaibo Basin of Venezuela, Royal Dutch Shell began construction on the Isla refinery in Curacao. Like the other refineries in the Caribbean, the Isla facility was also expanded greatly during World War II. In 1985, Shell sold the aging facility to the government of Curacao for one guilder, but also with a release of environmental liabilities. Unable to run the refinery directly, the Curacao government contracted with PDVSA to be the facility operator. Processing rates in the refinery gradually declined however, as a result of a lack of maintenance and the growing crude production problems in Venezuela. In 2018 and 2019, crude rates at Isla fell to near zero. The operating agreement with PDVSA expired at the end of 2019, but the island government has recently sued PDVSA due to a breach of payments.
The Curacao government has in the past been negotiating with three entities for a potential restart of the plant. One of the entities is from China, one from India, and the third is a local island group. Because the refinery has been idle for years, a restart would certainly be difficult and costly.
Aruba
Around 1928, Standard Oil of Indiana constructed the first oil processing units on the island of Aruba, with the purpose of processing oil from the same Maracaibo Basin in Venezuela which led to the construction of the Curacao refinery. They soon sold the facility to Standard Oil of New Jersey, who expanded and ran the plant for the next five+ decades, turning it into one of the largest facilities in the world, by World War II. The site was of such significance that it was attacked by a German U-boat in February 1942. Due to changing market circumstances, Exxon (the successor to Standard Oil of New Jersey) closed the refinery in 1985 and began to dismantle the units. The government of Aruba, in an effort to resuscitate an important part of the country’s economy, quickly took over the plant and sold it to Coastal Corporation. During its ownership, Coastal upgraded the refinery, which included the addition of a delayed coker. As Coastal Corporation ran into financial difficulties, it sold the facility to Valero Corporation in 2004. By 2012, after experiencing a number of years of poor economics, Valero made the decision to shut down the refinery. The island government continued to look for someone to restart the facility and ultimately convinced PDVSA owned CITGO to take over the facility in 2016. After a few years of studying potential restart options, CITGO ultimately decided not to proceed with those efforts and returned control of the facility back to the island government of Aruba in late 2019.
In July 2020, the Aruban government began seeking a new operator for the refinery and terminal assets. Two bid packages were offered with the first being control and operation of the refinery along with the potential of added petroleum related operations, such as LNG transshipment facilities. The second package was for a potential repurposing of the sites with new industries. The government of Aruba said it received 29 proposals in response to the first offering and 25 proposals in response to the second. The proposals were evaluated, then nothing happened. Considering the current headwinds in the industry, it is doubtful the refinery will reopen any time soon (if ever), but the use of the site as a terminal has a greater probability. The site has 13 million barrels of storage capacity, and its berths can accommodate ULCCs, Ultra Large Crude Carriers.
Pointe-a-Pierre, Trinidad
The Point-a-Pierre refinery on the island of Trinidad in the southern part of the Caribbean dates way back to 1917. The facility was constructed by a subsidiary of Central Mining Company of the UK to process local crude and had an original capacity of not much more than 1,000 BPD. It was expanded over the years so that by the end of World War II, the plant had become the largest in the British Commonwealth. In 1956, Texaco bought the site and further expanded its output to reach a capacity of 360 MBPD in 1970. Trinidad state owned Trintoc bought the refinery in 1984 and was then reorganized in 1993 to form Petrotrin. During the ownership of Trintoc/Petrotin, the refinery was derated to 160 MBPD by shutting down some simple distillation capacity.
Even though the refinery has seen numerous upgrades, it has become increasingly uncompetitive in the last two decades. It was able to survive partially due to the shutdown of the other Caribbean refineries, St. Croix, Aruba and Curacao, along with the demise of the Venezuelan refining industry and difficulties experienced by other Latin American facilities. These allowed for periods of improved margins. The facility, however, became the victim of poor management, waste and corruption and was closed in November 2018. Prime Minister Dr. Keith Rowley indicated that a cash infusion of $25 billion would have been necessary to provide necessary maintenance and upgrades and repay outstanding debts. The increasing control of the Oilfield Workers’ Trade Union over the company is often cited as a primary factor in the poor management and resulting closure.
In a desire to restart the refinery, the Trinidad government tried to sell the site in 2020. The highest bid was for $700 million by the union-sponsored Patriotic Energies and Technologies (PET), beating out proposals by private equity firm Beowulf Energy and the German refiner, Klesch. The PET proposal was rejected however, as it did not address outstanding acquisition and restart financing issues and the existing lien on the assets. While the government still wishes to see the refinery restart, the former trade minister Mariano Browne doubts the facility will ever reopen. He points out that the technical staff have all left the region and substantial capital would be needed for a restart.
The future landscape of the petroleum industry is as uncertain as ever.
