Refineria di Aruba N.V. (RdA) was established on October 1, 2016 as an organization wholly owned by the Government of Aruba (GoA) and charged with the important task of overseeing the adherence to the contractual obligations between CITGO Aruba and the GoA.
The Transfer and Master Settlement Agreement with Valero Energy Corporation and the Government of Aruba includes the Aruba Refinery, storage tanks and terminal facilities, and also the shares of Valero Marketing and Supply Aruba N.V. (VMSA) and related assets. Having switched the parent company, VMSA was renamed to Fuels Marketing and Supply Aruba N.V. (FMSA). FMSA functions as the sole importer and distributor of fuel oil, gasoline, ultra-low sulfur diesel (ULSD) and jet fuel on the island of Aruba. The purchase of FMSA by RdA changes the operating nature of the company.
Short Term Aruba Petroleum Products Outlook (STAPPO) Report
RdA in its capacity as the government entity that owns FMSA, will provide an official “Short Term Aruba Petroleum Products Outlook” report on a monthly basis. It is an integral part of RdA’s business strategy to monitor and stay informed on all global petroleum price trends, which means mainly all the occurrences that have or may have an impact on the imported petroleum products. Ultimately these prices have an impact on RdA’s business and our community. Therefore, it is RdA’s responsibility to adequately inform and advise the local community on all energy sector developments.
STAPPO August 2018 – Special Report: Aruba Refinery as Upgrader
The process configuration at the Aruba Refinery originated from the traditional “Crude Oil Refinery” to produce saleable products like Jet-A Kerosene for the aviation industry, diesel/gasoil for the transportation industry and gasoline for the automotive industry. The Aruban facility was once a very full-fledged refinery with catalytic cracking complex and super-fractionation units that were dismantled/discontinued in the seventies and eighties by Lago. In the nineties, Coastal Aruba installed the delayed coking units and let Valero Aruba continue with the Hydrocracking project. The Aruban refinery would be a very competitive refinery today, producing high valued clean products as shown below.
However, due to lack of investment in key conversion units together with tighter sulfur specification in clean products, the Aruba facility was no longer competitive by the end of 2009, producing only jet fuel as an on-spec clean product as detailed in the STAPPO report with all others as intermediate at a discount. The Aruban refinery does not have the required process unit facilities to produce the current stringent specifications of salable clean products. For sure if there were any business case for a traditional refinery, Valero would not have any hurdle to sell the facilities.
Re-Opening Aruba as an Extra Heavy Crude Upgrader
With the same process configuration, however, the facilities in Aruba can also be used to upgrade ultra-heavy crude (UHC) like the ones originating from the Venezuelan Orinoco belt or the Canadian Tar Sands. As a traditional refinery, the operation is considered to be part of the very competitive downstream sector where the refinery salable products are subject to very stringent specifications to meet environmental regulations as indicated. Applying the same process facilities as a UHC-upgrader, the operations will be part of the upstream sector where the main goal is to produce a salable synthetic crude oil that can be marketed globally. Typically, the gross margins in the upstream (crude oil production) sector is seven to ten times more than the downstream (refining) sector. The decline in the reserves of conventional, lighter crudes, of which Venezuela has proven reserves totaling twenty billion barrels, has obliged PDVSA to concentrate on developing the Orinoco Belt, where the crude oil is very heavy with high Sulphur, metals and thus very acidic. Therefore, it is not salable and cannot be processed in any traditional refinery (Aruba could not have processed this crude to meet the previous product specification prior to 2009). Venezuela is producing more extra heavy crude in its oil fields in the Orinoco Belt region than it can process in the existing four “upgraders” that were built more than a decade ago. These upgraders (Petro Monagas, Petropiar, Petrocedeño and Petro Anzoátegui) have a combined capacity of 630,000 b/d. With 297 billion barrels in proved and probable reserves covering more than 55,000 square kilometers in Venezuela’s southeast, the Orinoco Belt is one of the world’s greatest oil repositories. The August report continues showing the economies of the Aruban refinery as a refinery, indicating the reason why it was not and still is not attractive to operate as a refinery.
It is important to mention that RdA not only oversees the adherence to the contractual obligations between CITGO Aruba and the GoA, but also actively engages in the search for innovative business strategies for FMSA. Aside from the refinery, RdA has a long lease agreement for the refinery lands in San Nicolas. The total area of the land is approximately 3,750,000 m2 of which 80% is occupied by CITGO Aruba. The remaining 20% is available for other business activities. The available lands are called excluded areas. RdA intends to capitalize on the opportunity to redevelop the excluded areas in line with the GoA’s vision. The lands are available for innovative projects such as a Micro-Algae Plant Facility, a lease signed with WEB Aruba N.V. for a solar park, an inter-island fast ferry and so on.Furthermore, to maximize the effective allocation of resources on the local market, it is important that a synergy between the energy sector stakeholders becomes a reality in order to (1) ensure that Aruba has a certified local workforce, (2) incorporate Aruba Vocational Education and Training Institute (A-VET) into our education system, and (3) develop a knowledge economy for Aruba. Additionally, it is important to establish a National Safety Council on the island to ensure that safety and environmental regulations and standards are being enforced in the workplace to prevent incidents and accidents in the energy sector.RdA serves to enhance Aruba’s economy, contribute to the quality of life on behalf of present and future generations.