Vision on sustainable refining and terminalling.

For nearly 100 years, Curaçao has been connected to oil refining. There were many memorable periods. A significant
share of the Aviation Gasoline for the Allies was made in the Shell owned and operated Curaçao Refinery for instance, leading to a successful conclusion of World War II. It brought great economic benefits to the island, wiping out all unemployment until the 60's.

In fact, to meet the peak demand of about 12,500 workers in 1960, on an island with a population of less than 100,000 people, workers were brought in from a large number of Caribbean islands and Suriname, and even from as far away as Madeira (Portugal) to live and work on site. With the advent of automation and modernization, there was lesser need for manual labor at the Refinery. When Shell left in 1985, direct employment was 2,500 people, although Refinery capacity had not been reduced. The activities were simply carried out by a smaller group of people with different, modern skills.

Discussion

Labour
Today, the Refinery called Isla, owned by the Curaçao Government and leased to PDVSA (Venezuelan State Oil Company) since 1985, employs about 1500 people, directly and through contracted labour. Except for a handful of top positions, the entire staff consists of local people. They proved, in the course of time, to be very dependable and became successful in mastering new trades, such as manning and operating Control Rooms and computers, in addition to earlier technical professions such as welders, pipefitters, et cetera.  A Shell HR expatriate from Holland once attributed the historical successes of the Curaçao labourer to “unique eye-hand coordination”, all-important for secure welding. One could ask: does this also explain the ongoing success of the Curaçao-born baseball players around the world?
 
Refinery Hardware
The Refinery is a so-called “Fully-Complex” refinery, including considerable upgrading units and even all types of lubricating base oil manufacture. It is considered to be among the best in northern South America and the Caribbean. It achieved this distinction by periodic updating, modernization and proper maintenance. Its geographical location (the Schottegat bay) is most favorable both for crude oil producing countries, such as Venezuela, Colombia, Brazil, Mexico and West Africa, as is the proximity to countries in the Caribbean and the USA and Canada, importing products that are made in other parts of the world.

Oil Terminal
In 1976 Shell built the first transshipment terminal in the Caribbean at Bullenbay. It has been used to transfer crude oil from VLCC’s (Very Large Crude Carriers, 300,000-600,000 DWT) coming from the Middle East and Africa to smaller vessels, say 100,000 tons, to be able to enter the shallow US harbors. At present PDVSA uses it in reverse order, namely crude oil and / or Heavy Fuel is brought to Curaçao in small vessels and transshipped to VLCC’s that then go on to the Far East (e.g. China). Terminalling can be a stand-alone activity that enhances the value of having a well-operated Refinery nearby.

Vision

The contract with PDVSA expires in 2019 but before then, certain technical adjustments to the Refinery must be considered, in order to remain competitive and viable. The Sulphur content of key products made there, such as Gasoline and Diesel has to be reduced to meet new and stricter US product specifications. Also, the effluent smoke from the chimneys requires cleaning up via Flue-Gas Scrubbers or by burning LPG or LNG gas, instead of High Sulphur Fuel oil or asphalt. Last, but not least, to improve refinery profitability, the barrel has to be whitened further by still more upgrading, reducing fuel oil production and increasing more valuable so-called “white products” (gasoline, kerosene, gasoil/diesel).

The Curaçao Government commissioned a study by ECORYS (NEI Rotterdam) whose final 2012 Report, in cooperation with Purvin & Gertz for technical matters, is optimistic about the future of the Curaçao Refinery. However, the three subjects mentioned above must be addressed, which will cost around US$ 2.5 billion. This is much less than building a new grass-roots refinery. PDVSA is interested in becoming an equity partner, in addition to being a lessee, but may not have the necessary funds. We - as is Venezuela - are open to third party participation, for instance by Colombia (Ecopetrol). Brazil (Petrobras), China (Petrochina), Repsol (Spain), et cetera.

In addition, if oil or gas is found and produced after further exploration of the waters around Curaçao, being able to refine the crude oil locally or use some of the gas found is an added incentive to maintaining a viable Refining Industry on the island of Curaçao.

1. History
   Originally built by Shell at the end of WWI at Emmastad, on the shores of Schottegat Bay, Curaçao's beautiful inner harbour. Purpose: To refine Shell crude oil from Venezuela for export markets. Contributed greatly to the success of the Allies in WWII (aviation gasoline, etc.) Well maintained and continuously modernized. Peak employment around 1960: 12,500 persons. Shell sold Refinery in 1985; taken over by Government of Curaçao. Refinery was then leased to PDVSA till 2019 (originally to 1994, then 2014, then 2019) and is now called Refineria Isla (Curaçao).
   
   
2. Type of refinery
   The Refinery is "FulIy Complex" with considerable upgrading, including Lubricating Oil manufacture. Capacity: Greater than 320,000 barrels/day Crude oil type: Can refine both Light and Heavy crudes (say 10 API). Originally ran only Venezuelan crudes. It has also processed Ecuadorian Oriente, Colombian crudes, Mexican, including Heavy Maya, Nigerian Ultra Light crude (greater than 40 API), etc. Units in operation: Crude Distillers (2), High Vacuum Units (5), Catalytic Cracker, Catalytic Reformer, Mild Hydrocracking, Thermal Crackers (2), Alkylation, Desulphurization (4), Sulphur Plant, Lubricating Oil manufacture/process (HVI/MVl/LVl Lubs). Associated Intermediate and Storage Tanks Jetties for receiving/loading Crude Oil and Product Tankers, Highly automated since mid-60's. Employment now about 1000 people fulltime and about 500 Contractors. Except for a handful of expatriates, they are all local people. Modern Utility facility supplying Power, Steam, Water and Compressed Air. Refineria Isla continues to be well maintained by its Venezuelan Iessees and continuously updated.
   
   
3. Full range of finished products made
   LPG, Motor Gasolines, Kerosine/Jet Fuel, Gasoil/Diesel Oils, Fuel Oils, Asphalt/Bitumen, Lubricating Oils.
   
   
4. Value of refinery
   Based on a study carried out by ABN AMRO Bank in 2006, depending on assumptions made: between USD$ 1 billion and USD$ 3.5 billion.
   
   
5. Oil transshipment terminal
   Curaçao Oil Terminal (COT) built in 1975. Located at Bullenbay, it is the Western Hemisphere's largest. Contains 6 Jetties and sufficient number of huge floating roof tanks. Able to handle the largest VLCC's built, from 300,000-600,000 DWT. Can also handle LR Tankers (100,000 DWT). Originally conceived to transship crude oil from VLCC's from the Middle East and Africa to smaller vessels. Nowadays mostly to transfer from smaller vessels to VLCC's for sailing to the Far East, e.g. China.

J. de Sola
Curaçao Management Consultants