Venezuela's PDVSA unit in the United States, Citgo Petroleum, and Aruba on Friday signed an agreement to reactivate a 235,000-barrel-per-day refinery on the Caribbean island, an investment designed to help process the South American's oil producer's extra heavy crude. The Aruban government reported last month that the agreement involves a 25-year lease to allow Citgo to operate the refinery, after investments amounting to at least $1 billion.
The "Definitive Participation Agreement" framework signed in Caracas said that Citgo will invest in the refinery and that Aruba will foster a positive environment for foreign investment, but did not provide details. "We have the financing, Citgo has gotten financing to start works we hope will last 12 months," PDVSA president Eulogio Del Pino told Reuters on Friday night, adding the funds came from "international banks" in a project finance scheme.
"In 12 months we'll be sending diluted crude from Venezuela there, we'll upgrade it and we'll have a closed circuit of upgraders in the Caribbean," added Del Pino, who is also Oil Minister. Even though PDVSA's financial condition is weak amid low crude prices, its subsidiary Citgo enjoyed some relief last year due to higher refining margins, which would allow it to direct a portion of its profit to Aruba.