WILLEMSTAD - A deal between Curaçao Refinery Utilities RV (CRU) and SPS Drilling E&P to lease 5.8 million barrels of oil storage capacity at the Bullen Bay terminal fell through this week, the oil company said on Thursday.

SPS had been planning to sublease the storage space to other companies, but the rates those potential customers were willing to pay was lower than it initially expected, prompting SPS to ask CRU, an affiliate of Refineria de Korsou (RdK) to seek to renegotiate the deal, a source close to the talks said.

RdK rejected a contract renegotiation, so SPS decided to walk away from the deal, according to the source and an internal communication by CRU, in which the company also said there will not be layoffs as consequence of the broken deal.

Manuel Chinchilla, CEO of Southern Procurement Services (SPS), the parent company of SPS Drilling E&P, confirmed on Thursday that the deal had fallen through.

“We will not move forward with the deal as there was no agreement on tariffs,” Chinchilla said.

The market contango - where future prices are higher than current prices - that motivated many oil producers and traders to place oil in storage earlier this year began fading last week, reducing the appetite for storage and pushing down fees facilities charge for keeping the oil in shore tanks.

Venezuela’s oil company PDVSA rented Bullen Bay and the 355,000-barrel-per-day refinery through a long-term contract that expired in December. Since then, PDVSA has been removing its oil inventories out of the facility.

RdK is simultaneously trying to find a long-term operator for the refinery and the neighboring Bullen Bay terminal, a process it has dubbed the Arawak Project.