ConocoPhillips had seized assets from state-owned PDVSA - including crude oil for Isla Refinery, a source told Lube Report - to legally enforce an award granted by the International Chamber of Commerce. But the Houston-based oil company said it will suspend those actions after PDVSA agreed to the settlement. A Curacao official confirmed that the refinery is not running partly because the seizure deprived it of crude feedstock.
No crude ships have been in for some time, the source explained. We are still waiting for the first crude ship to deliver its cargo.
PDVSA will pay approximately $500 million within 90 days of signing the agreement, and then pay off the remaining $1.5 billion in quarterly installments over a period of four and a half years, according to a press release issued by ConocoPhillips.
The ICC awarded ConocoPhillips approximately $2 billion on April 25 as compensation PDVSAs expropriation of ConocoPhillips investment in the Hamaca and Petrozuata crude oil projects in Venezuela in 2007.
Should PDVSA default, [ConocoPhillips] can resume global enforcement actions of the ICC award judgment and enforce the settlement agreement in all jurisdictions, a ConocoPhillips spokesperson said.
Other settlement details remain confidential, including whether PDVSA has made its first payment yet.
Maintenance on some units also needs to be completed before the refinery can restart, but PDVSA personnel are performing that work now.
Financially troubled PDVSA has operated Isla Refinery since Shell conveyed it to the Netherland Antilles - now Curacao - in 1985. Its current lease runs through the end of 2019. However, the Curacao government is searching for both a short-term operator to take over the lease and a long-term replacement for beyond 2019 as PDVSA struggles to pay its debts and run the refinery. The government had hoped to choose a candidate for the short term by the beginning of September.
Curacao is an island located in the southern Caribbean and is a constituent country of the Netherlands.
The Isla Refinery, located in Curacaos capital Willemstad, has crude oil production capacity of 335,000 barrels per day. The refinery 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 stocks. Its nameplate base oil production capacity is the second-biggest in South and Central America and the Caribbean, according to LubesnGreases 2018 Guide to Global Base Oil Refining.