WASHINGTON - Thanks to a crucial mediating role played by Qatar, Curaçao appears to be in a position to benefit from the lifting of U.S. sanctions against Venezuela. Qatari efforts have resulted in a preliminary deal to restart a refinery and terminal on the island, potentially restoring Curaçao as a key center for the processing and shipping of Venezuelan oil, as reported by the Wall Street Journal.
Qatar's diplomatic success, engaged in discreet talks between the United States and Venezuela for some time, led to the easing of sanctions against the South American country in October.
This has paved the way for renewed economic opportunities in the region, particularly for Curaçao. The island, located just 64 kilometers off the Venezuelan coast, hopes to reclaim its historical role as a transit port for oil to international markets.
These developments could have a significant impact on Curaçao's local economy, which was previously heavily reliant on the oil industry. The restart of the refinery could not only yield economic benefits but also contribute to employment on the island.
Qatar did not join the U.S. sanctions against Nicolás Maduro's government in 2019 and has apparently used its neutral position to act as a mediator. With this recent diplomatic victory, Qatar seems to be extending its financial and geopolitical influence into the Caribbean region.
ORYX
Oryx, the Qatari company owned by the Doha-based Ghanim Bin Saad & Sons Group, is exploring less-trodden regional destinations and targeting financially distressed energy sources, such as those in Curaçao. The company already has a presence in Caracas and Barbados, and its website is available in English and Spanish.
Oryx recently signed a Memorandum of Understanding to operate the Bullen Bay refinery and deepwater terminal, with Vancouver-based Maunsell Investment Management coordinating Oryx's commercial and technical assessment before a final agreement with Refineria di Kòrsou, expected early next year.
According to Maunsell, a preliminary estimate of Oryx's investment is over $750 million. Oryx stated in a release that it aims to expand its portfolio "with investment opportunities in the oil and gas sector in Curaçao and other countries in the region."
Asphalt
The U.S.-based company Global Oil Management Group is already renovating a small part of the refinery to produce asphalt, mainly for the U.S. market. Oryx is also considering the construction of a small LNG terminal on the island to replace the more polluting heavy fuel oil from the refinery, providing energy and supplying nearby markets, say sources familiar with the investment opportunities.
Shell built the refinery in the capital of Curaçao, Willemstad, over a century ago to process Venezuela's heavy crude oil, and "the refinery will not meet the new emission standards unless an LNG facility is installed to run it," according to local environmental activist Peter Van Leeuwen.
The lifting of sanctions against Venezuela is about to unleash Venezuelan gas for adjacent markets. Nearby Trinidad and Tobago are reportedly negotiating with the Trinidadian government to import Venezuelan gas for processing in a Shell-led liquefaction plant.
PdVSA
The Venezuelan national oil company Petróleos de Venezuela, better known as PdVSA, had a lease agreement for the operation of Refineria di Kòrsou and the Bullenbaai terminal from the 1980s until 2019. Even before the U.S. imposed oil sanctions in early 2019, PdVSA was already facing difficulties on Curaçao and other Caribbean islands like Aruba and Bonaire.
Mismanagement, underinvestment, and corruption had eroded the company's oil production, preventing it from maintaining its nearby assets. Creditor rights over PdVSA assets had halted much of the remaining oil trade on the islands, exacerbating economic issues just as Caribbean tourism declined during the Covid-19 pandemic.
For years, Curaçao sought potential candidates for Refineria di Kòrsou, which once provided thousands of local jobs. The facility remained idle until recent months when Global Oil began renovating a small part of it.
Harry Sargeant IV, the president of Global, stated that the company "will seek Venezuelan crude oil for the asphalt unit in compliance with U.S. sanction rules." The company aims to start asphalt production in May.
However, Oryx would focus on reviving the island's role as a logistical hub for Venezuelan oil and potential expansion into gas. Proposals to restart the factory using alternative supply sources were economically unfeasible, given that the refinery was designed to process heavy oil from nearby Venezuela, according to experts familiar with the operations. Now, Curaçao has an opportunity to restore the former business model that generated revenue.
The U.S. suspension of sanctions against Venezuela "significantly enhances the prospects for a rapid restart of the refineries," says Patrick Newton, CEO of Refineria di Kòrsou. However, Curaçao faces challenges, including competition with other buyers vying for Venezuelan oil, which could transport energy supplies directly to the U.S. or other markets. There is also concern that other shippers could leave Curaçao's deep-water port for other Caribbean islands like Aruba.
Additionally, the initial six-month period for easing sanctions poses a risk for aspiring oil buyers like Curaçao. Refineria di Kòrsou states that it is currently seeking a 'more sustainable' license from the U.S. Department of the Treasury, which controls the sanctions.
