Aruba, one of the many tourist magnets in the Caribbean, is mulling the restart of a crude oil refinery after the pandemic devastated the global tourist industry.
Reuters reports that the island suffered a 67-percent drop in tourist arrivals last year, which led to a 25.5-percent shrinkage in economic growth, despite the mitigating effect of government stimulus organized with the assistance of the Netherlands, of which it is a constituent country.
However, the assistance has conditions tied to it, Reuters notes. The Netherlands had insisted that Aruba effected some reforms, including salary cuts for public servants and economic diversification. The restart of the refinery seems to be one way to diversify the Aruba economy, which like most local ones, is heavily reliant on tourism revenues.
The facility has been idled since 2012 when its operator Valero Energy said it wasn't profitable enough to keep operating. The facility has a daily processing capacity of 235,000 bpd of heavy, sour crude. Valero bought it in 2004 from El Paso Corp. for $465 million. Five years later, the U.S. refiner shut down the facility because it incurred a loss on it.
Its second shutdown came amid a generally worsened economic situation for Caribbean refineries that also prompted the shutdown of another facility, the Hovensa refinery, on the island of St. Croix. That facility, jointly owned by Hess Corp. and Venezuela's PDVSA, was converted into a terminal.
Conversion into a terminal is one possible future for the idled refinery on Aruba. Another, according to the Reuters report, is replacing it with a liquefied natural gas import terminal. The island is reportedly in talks with one U.S. company for the possible construction of an LNG terminal on the refinery site and with another for the restart of the refinery.
By Charles Kennedy for Oilprice.com
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