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Aruba souring on Citgo upgrader: Update

  • Market: Crude oil, Natural gas, Petroleum coke
  • 20/09/18

Adds Citgo Aruba response.

Aruba is losing patience with Venezuelan state-owned PdV subsidiary Citgo's slow-moving, ambitious plan to transform the rusty skeleton of Valero's former 235,000 b/d oil refinery into a heavy crude upgrader.

"Under the current circumstances the chances that Citgo can carry out the deal are slim," Aruba Prime Minister Evelyn Wever-Croes told Argus. The project is "very important" to diversifying the island's tourism-based economy, but if Citgo fails to have it up and running by an October 2020 deadline, the government would be willing to terminate the deal and find another partner, she said.

The $1.1bn downstream project "makes business sense" to the senior government officials and oil industry executives interviewed by Argus on the tiny Dutch Caribbean island. Under a 2016 long-term lease signed by Venezuela's former PdV chief executive Nelson Martinez with the Aruban government, Citgo Aruba Refining would refurbish the San Nicolas installations and build a 110km natural gas pipeline from Venezuela's Tiguadare gas treatment facility to run the complex, which includes two cokers. Around 209,000 b/d of diluted crude oil (DCO) from Venezuela's Orinoco heavy oil belt would be upgraded into 125,000 b/d of 22.5° API Maya-like synthetic crude with 1.2pc-1.5pc sulfur. The stripped-out naphtha would be recycled back to Venezuela, and sulfur and coke sold. The estimated refurbishment cost of $600mn-$700mn seems high to some officials, but it is dwarfed by the $8bn cost of a greenfield upgrader, one said.

What the project lacks is financing and stakeholder confidence in Citgo's ability to fulfill the directly awarded contract, which Aruba's year-old government inherited from the previous administration. So far Citgo has plowed in little money and has not completed a Phase 2 inspection or control budget cost estimate, even after work was supposed to pick up following the stunning November 2017 arrests of Martinez and former Venezuelan oil minister Eulogio Del Pino on unrelated corruption charges. In August Citgo committed a sparse $35mn for Phase 2, before the final refurbishment phase kicks off in second quarter 2019.

"The contract is not very favorable to us," said Richard Eman, chairman of the board of RdA, the government entity that owns the refinery. The agreement has inadequate safeguards for Aruba, making it difficult to sever before October 2020, he said. "There is a lack of confidence in Citgo because it has not produced, but they have time to prove us wrong."

A Citgo Aruba official told Argus this afternoon that Phase 2 started in early September and "entails detailed inspection of units, piping, buildings and relevant equipment to come to a Class 2 cost estimate of the actual refurbishment," reiterating the message that Venezuelan energy minister and PdV chief executive Manuel Quevedo recently conveyed to the Aruban government. Phase 2 will be completed in March 2019 and involve around 471 workers, of which some 85pc will be local, the Citgo Aruba official said, reconfirming "the commitment of PDVSA to the development and successful completion of this strategic project."

PdV officials say privately that they "understand the island's concerns." The Venezuelan company regularly blames US financial sanctions for thwarting financing options. Aruba had tried to secure a waiver from the US Treasury's Office of Foreign Assets Control (Ofac) on Citgo's behalf, but it was rebuffed because Washington wants to block money flowing back to Caracas. That leaves the heavily indebted island with little choice but to hope Citgo delivers within two years.

In the meantime, Citgo is using Aruba as a terminal, routinely unloading DCO tainted by excessive water into storage tanks to allow it to settle before reloading it for export to the US and Asia, a local shipping source said. Around three 500,000 bl cargoes of DCO and occasionally Boscan crude or fuel oil come through Aruba from Venezuela each month.

In contrast to fellow Dutch Caribbean islands Curacao and Bonaire, Aruba was relatively unscathed by debt-related liens that US independent ConocoPhillips levied on PdV's local assets in early May, because the oil cargoes coming to Aruba and the 15-year refinery and terminal lease plus a 10-year optional extension belong to Citgo, not PdV. But the episode caused delays, and left Aruba waiting for the other shoe to drop.

That shoe could be Crystallex. The now-defunct Canadian mining company, like ConocoPhillips, is seeking to enforce an international arbitration award for the takeover of its Venezuelan assets. Crystallex in August secured an order from a US federal court in Delaware to attach the shares of PdV Holding, the parent of Citgo Petroleum and Citgo Aruba Refining. The case is now winding its way through appeal, but Crystallex has said it is already preparing to auction Citgo.

The Aruba project would be an afterthought if not a liability to parties eyeing Citgo's 750,000 b/d of US refining capacity. If a new Citgo owner sought to retain the Aruba assets, the US ruling would have to be ratified by a local court, a Dutch Caribbean attorney says.

Aruba would jump at the chance to replace Citgo with a robust and unencumbered counterparty. But the project still relies on Venezuelan crude and gas supply, which a truncated PdV would be reluctant to sell to a newcomer that had scooped up its prized US asset.


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10/03/25

Brazil ignores fossil fuel phase-out in Cop 30 letter

Brazil ignores fossil fuel phase-out in Cop 30 letter

Sao Paulo, 10 March (Argus) — Climate activists praised Brazil's stance of making UN Cop 30 a "turning point" for real climate change commitments but criticized the presidency's letter for turning a blind eye to fossil fuels' leading role in global warming. The summit's president Andre Correa do Lago unveiled on Monday a letter addressing the event's goals and outlooks, which includes boosting climate financing to $1.3 trillion/yr from the target stipulated at Cop 29 of $300bn/yr. "Lago calls on foreign countries — especially the US — to leave individuality and irresponsibility behind in exchange for cooperation and our planet's future," scientist Karin Bruning — a graduate of the University of Heidelberg and the Massachusetts Institute of Technology — said. "However, the letter has no use if Brazil does not pull its own weight." Bruning recalled Brazilian president Luiz Inacio Lula da Silva's [public feud](http://direct.argusmedia.com/newsandanalysis/article/2657369 with the country's environmentalist watchdog Ibama regarding the exploration in Brazil's equatorial margin region. "A country with so much renewable energy available cannot look at past solutions such as exploring and pushing for fossil fuels," Bruning said. She also highlighted the importance of respecting technical and scientific decisions on matters such as oil exploration. Environmental concerns have always been at the center of the equatorial margin debate, as it stands near a freshwater barrier reef. State-controlled Petrobras has long been trying to explore the area's Foz do Amazonas basin — which holds an estimated 10bn bl of crude, according to energy research bureau Epe — but has struggled to receive the environment licenses to do so. Ibama last denied the company a request to drill in the area in May 2023. Brazilian climate think tank Observatorio do Clima called the letter "inspiring," but added that it "excludes the elephant in the room." It recognized the letter as a "relief for giving the Paris Agreement negotiations to professionals who understand the gravity of the moment" but bashed it for keeping fossil fuels' gradual stoppage out of Cop 30's priorities list. Still, Correa do Lago's letter was celebrated for recognizing "the scale of the challenge and the urgency of response," according to climate change think-tank E3G's associate director Kaysie Brown. Holding on to past pledges Previous Cop agreements and global stocktakes (GST) — a five-yearly checkpoint agreed upon in the 2015 Paris Agreement — were ignored and pushed back against in Baku's final text. Correa do Lago's letter focused on rolling back decisions regarding developing countries and increasing financing for them, which has long been one of the Brazilian government's priorities. This includes the climate financing target of $1.3 trillion. "We do have pending issues to solve at Cop 30, notably the UAE dialogue on implementing the GST outcomes and the just transition work programme," Correa do Lago said in his letter. "The GST is an invaluable legacy that unites us. We must all continue to subscribe to it as the ultimate benchmark for climate implementation." By Maria Frazatto Send comments and request more information at feedback@argusmedia.com Copyright © 2025. Argus Media group . All rights reserved.

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Vitol's Sarroch refinery crude receipts at 6-year high


10/03/25
News
10/03/25

Vitol's Sarroch refinery crude receipts at 6-year high

Barcelona, 10 March (Argus) — Crude receipts at refiner Saras' 300,000 b/d Sarroch refinery in Italy rose to a six-year high in February, with the plant receiving a trio of new grades in February-March. Receipts were close to 320,000 b/d last month compared with 205,000 b/d in January, according to Argus tracking. Receipts averaged 245,000 b/d in 2024, slightly lower than around 250,000 b/d in 2023. Saras had aimed for 265,000-270,000 b/d last year, without success. In the past decade the unit has consistently underperformed targets, not achieving much more than 260,000 b/d in a year. Former workers said the plant is unable to distill crude in excess of 285,000 b/d. After repeated issues and "technical hiccups" it was unable to run at that pace for extended periods, a problem shared with the large majority of its Mediterranean peers. But Saras appears to have been making efforts to improve availability with a string of planned maintenance programmes in the past 18 months. New owners, trading firm Vitol, may be keen to test the unit's capabilities. Vitol purchased the unit last year in a €1.7bn ($1.84bn) deal and appear to be introducing new grades. Sarroch took receipt of a first cargo of 28°API Guyanese grade Payara Gold in February, having in December sampled Senegal's Sangomar crude for the first time. Receipts in February comprised 125,000 b/d of Libyan crude, split between Amna, Bouri and Zueitina grades, 70,000 b/d of Angolan crude split between Palanca and Pazflor, 50,000 b/d of Azeri BTC Blend, 30,000 b/d of US WTI, 25,000 b/d of Caspian CPC Blend and 20,000 b/d of the Payara Gold. Argus assessed these at a weighted average gravity of 35.4°API and 0.5pc sulphur content, compared with 32.2°API and 0.7pc sulphur in January. The slate averaged an estimated 33.3°API and 0.8pc sulphur last year, almost identical to 2023. The pace of delivery in March appears good, with around 600,000 bl of BTC Blend unloaded. Twi further new grades for Sarroch were received in the form of 1mn bl of heavy sweet Meleck from Niger, and 735,000 bl of the re-branded Kazakh Urals grade, Kebco. Sarroch was not a major buyer of Urals, prior to the imposition of sanctions following the Russia-Ukraine conflict, and received its last Baltic-loaded Urals in April 2022 . A further 1mn bl each of Brazilian Frade and Libyan Attifel are on route. By Adam Porter Sarroch crude receipts mn bl Send comments and request more information at feedback@argusmedia.com Copyright © 2025. Argus Media group . All rights reserved.

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Mark Carney to be Canada's next prime minister: Update


10/03/25
News
10/03/25

Mark Carney to be Canada's next prime minister: Update

Adds recent poll data on national election, more on Carney's background. Calgary, 10 March (Argus) — Mark Carney is to replace Justin Trudeau as Canada's prime minister after comfortably winning the governing Liberal Party's leadership contest. Carney, who served as governor for the Bank of Canada and then the Bank of England, will be sworn in later this week once Trudeau officially resigns. Carney has never held political office and does not have a seat in Canada's House of Commons. In his victory speech, he vowed to protect Canada's sovereignty and stand firm in the face of US president Donald Trump's trade war. Although Trump on 7 March repealed most of the tariffs he imposed on Canada just a few days earlier, Carney pledged to continue with retaliatory measures. "My government will keep our tariffs on until the Americans can show us respect," he said. "The Americans, they should make no mistake, in trade, as in hockey, Canada will win." Carney also referenced Trump's repeated calls to make Canada "the 51st state" of the US, vowing that "Canada never ever will be part of America in any way, shape or form". Liberals rebound in polls on tariff war Carney will stand for the Liberal Party in the next general election, which must be held by 20 October. Opposition parties have vowed to trigger a general election at first chance when Parliament returns to session on 24 March, but a recent rebound in polls may prompt the Liberals to call one earlier yet. An Ipsos poll done in late-February showed the Liberals making up a 26-point deficit to take a narrow lead, the first time since 2021. The Conservatives have since pulled ahead slightly, according to Nanos Research, while a poll by Innovative Research Group indicates a 38pc to 31pc lead for the Conservatives over the Liberals. Even with the Conservatives ahead, both indicate a much tighter race compared to earlier in the year. The remarkable rebound for the Liberals comes after the promise Trudeau would no longer be the face of the party, and the perceived similarities between Trump and Conservative leader Pierre Poilievre. Trump's aggressive actions and rhetoric towards Canada have stoked anti-American sentiment across the country and prompted the public to reexamine the trade relationship with its southern neighbour. A more recent poll by Ipsos shows only 1-in-10 Canadians want to strengthen their reliance on the US. Carney was born in Northwest Territories and grew up in Alberta, but it remains to be seen if his western upbringing will help the Liberal Party's success in the region given their unpopularity with the oil patch. The last time Canada had a prime minister born in western Canada was Kim Campbell in 1993 who succeeded Brian Mulroney under similar circumstances when he stepped down from the top post. By Brett Holmes and James Keates Send comments and request more information at feedback@argusmedia.com Copyright © 2025. Argus Media group . All rights reserved.

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US targets 'lower' oil price, no target: Wright


10/03/25
News
10/03/25

US targets 'lower' oil price, no target: Wright

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Houthis threaten to resume Red Sea attacks


10/03/25
News
10/03/25

Houthis threaten to resume Red Sea attacks

London, 10 March (Argus) — Yemen's Houthi group has threatened to resume attacks on commercial shipping in the Red Sea if humanitarian aid is not allowed into Gaza. "We are announcing a four-day notice," the group said in a video statement on 7 March. "This is to allow mediators to do what they do. If the enemy continues, after four days, to stop humanitarian aid from entering the Gaza Strip, including food, medicine, then we will return to continuing our sea operations against the enemy." The four-day deadline expires in the evening of 11 March local time. Israeli energy and infrastructure minister Eli Cohen signed an order on 9 March to cut electricity supply to Gaza in an effort to pressure Palestinian group Hamas to release the remaining Israeli hostages being held in the territory. The Houthis began their attacks in the Red Sea in November 2023 in what they said was a campaign of solidarity with Palestinians in Israel's war against Hamas in Gaza. The group announced a cessation of hostilities against ships in the Red Sea in January this year, with the exception of Israeli-owned and Israeli-flagged vessels. The Houthi campaign has weighed heavily on trade flows between Europe and Asia through the Suez Canal, forcing many shipowners to take the longer and more expensive route around southern Africa's Cape of Good Hope. By Andrey Telegin and Hussein Al-Khalisy Send comments and request more information at feedback@argusmedia.com Copyright © 2025. Argus Media group . All rights reserved.

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