By Alexandra Ulmer
Citgo Petroleum, the U.S. unit of Venezuela’s PDVSA, will likely invest about $400 million to $600 million to overhaul Aruba’s refinery under a 25-year lease with the Caribbean island’s government, a top PDVSA official said on Wednesday.
Citgo earlier this month signed the agreement to reactivate the 235,000-barrel-per-day refinery, which would help process the South American’s oil producer’s extra-heavy crude.
The previous operator, Valero Energy Corp, idled the refinery in 2012 because of its low profit.
“We’re eyeing investments in the refinery that would be more or less between $400 (million) and $600 million,” Jesus Luongo, vice president of refining, trade and supply, said in an interview on the sidelines of an oil workers’ rally in support of the leftist government of Nicolas Maduro.
PDVSA President Eulogio Del Pino told Reuters earlier this month that Citgo was raising money from international banks to fund the project.
Luongo declined to say how much Citgo was seeking.
PDVSA’s finances have declined with the slump in oil prices, but Citgo enjoyed some relief last year from higher refining margins.
The Aruba complex could be up and running again within 1-1/2 to two years, Citgo has said.
Venezuela is also mulling building a gas pipeline from the Paraguana peninsula northward to the Aruba refinery, Luongo added.
Once the oil complex is up and running, PDVSA hopes to boost processing of the OPEC nation’s extra-heavy crude output from the Orinoco Belt, whose petroleum deposits are some of the world’s largest.
“The plan is to use the refinery as an upgrader … for the Orinoco Belt,” added Luongo, as workers waved a huge yellow, blue and red Venezuelan flag.
“It’s a refinery that looks a lot like an upgrader.”
Venezuela’s plan to build a new complex of upgraders, which convert extra heavy crude into lighter crude, has been hit by major delays.
The Caracas-based company has been increasingly importing naphtha and crude to dilute oil produced in the Orinoco.
Luongo said he expected a very similar breakdown of imports in the second semester compared with the first, but declined to provide specifics on PDVSA’s commercial strategy.
“The new upgrader that will come out of the Aruba refinery will give us more flexibility with this,” Luongo added.