Isla Refinery Agrees to Deal with Klesch

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Isla Refinery Agrees to Deal with Klesch
A view of Isla Refinery in Curacao, an island in the southern Caribbean and a constituent country of the Netherlands. Photo: Anna Krasnopeeva/Dreamstime

Refineria di Korsou – the Curacao government entity that owns the Isla Refinery – announced an agreement last week for industrial commodities conglomerate Klesch Group to operate the facility, which includes a base oil plant.

Klesch Group will replace Venezuelan-run Petroleos de Venezuela S.A., which has operated the refinery for almost four decades. Klesch is an investment firm and oil trader with one oil refinery in Heide, Germany. The company, with offices in London and Geneva, does not own any lubricant-related assets. A statement issued by RdK said the agreement included a long-term lease on the site.

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The refinery has operated rarely if at all over the past year. For a time PdVSA was been unable to procure crude oil feedstock because of a lawsuit brought by ConocoPhillips in 2018. The suit was settled, but PdVSA continues to be hampered by United States sanctions.

PdVSA has operated Isla Refinery since Shell conveyed it to the Netherlands Antilles – now Curacao – in 1985.

Refineria di Korsou and PdVSA recently came to an agreement on a short-term extension for the state-run oil company to continue operations until a new operator was found. The extension runs up to a year, but could be shorter, depending on how long it takes to transition to the new operator, Marcelino de Lannoy, head of the refinerys negotiation team, told Lube Report. PdVSAs lease for the refinery was set to expire on Dec. 31, 2019.

PdVSA made a final bid to remain the refinerys operator in July, when PdVSA President and Venezuela Oil Minister Manuel Quevedo met with Refineria di Korsou, Reuters reported. Klesch and RdK entered into exclusive negotiations in September.

The Curacao owner previously chose Houston-based Motiva Enterprises to run the refinery in December 2018, according to a Curacao news organization. Refineria di Korsou never publicly identified Motiva but said the company selected then as preferred bidder withdrew from negotiations after a corruption probe was launched into the selection process. The bidder cited a delay in negotiation and the refinerys review of other opportunities for its withdrawal, according to the refinery.

De Lannoy told Lube Report the probe concluded that no fees were transferred for preferential treatment, though the agency dismissed three workers for violating its rules of conduct.

Curacao is an island in the southern Caribbean and is a constituent country of the Netherlands.

The Isla Refinery, located in Curacaos capital Willemstad, has crude oil capacity to process 335,000 barrels of crude per day. It includes a base oil plant that has capacity to produce 5,000 b/d of API Group I paraffinic base oils and 3,700 b/d of naphthenic base stocks.