Refineria di Aruba, RdA, extends deadline submittal date of Request For Expression of Interest

We were told by the MinPres last week that Refineria di Aruba (RdA) extended the submittal date of the Request for Expression of Interest (RFOI) with regards to the Aruba Refinery operation and new industrial developments for two weeks from July 17th to July 31st.

The MinPres reported that: Hopi compania, entidad y/of grupo a cuminsa cana e proceso manera indica den e dos REOI nan. We have many suitor, and the notary handling the process noted that companies are requesting extensions, in order to collect the required documentation, for REOI-1 and REOI-2 until July 31st, 2020

So far so good. But there are lessons to be learned…

On Friday Refineria di Korsou (RdK) unilaterally terminated its Asset Purchase Sale Agreement (ASPA) with the Swiss Klesch Group, which I originally was jealous for, how come they moved so fast, and we couldn’t. Apparently, the whole process was flawed from the beginning, and now RdK may potentially face a lawsuit in the millions of dollars as a result of this imperfect process.

While Curacao is struggling to revive its refinery, it is not alone. Limetree Bay, the St. Croix Refinery, has overrun its original refurbishment budget of $1.3 billion by more than a billion dollars and is still not up and running and may not be for several months because of more start up delays including environmental permits.

The common thread??

All three of these Caribbean refineries will find it difficult, if not impossible, to economically meet World Health Organization’s (WHO) standards for ambient air quality, not to mention effluent/waste water qualities, especially for Aruba and Curacao, with their ancient refineries.  To remedy the historically high levels of sulfur dioxide (SO2) emissions the islands have previously experienced, will take a combination of mitigating actions and investments in technology that most investors are unwilling to commit to, but that island governments MUST INSIST upon, early on in the negotiating process.

RdK wasn’t transparent throughout the APSA, when negotiating with Klesch. If Klesch expected full disclosure and complete information, RdK fell short in a number of areas: 1) It reportedly provided inaccurate information regarding its Utilities Plant reliability challenges; 2) It overstated the in-service crude storage availability of the Oil Terminal; 3) Data transfer that was essential for the restart of the refinery was lacking; and 4) RdK was unable to maintain the refinery in an idle state of preservation.

My oil expert friends maintain that these are all lessons to be learned by RdA, in its search for a the right operator, assuming responsibility for the Aruba Refinery operation and new industrial developments. Full disclosure and complete information are the building blocks of a solid partnership, they conclude.  

 

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July 20, 2020
Rona Coster