Venezuela’s Petroleum and Mining Minister Eluogio del Pino announced on June 11 that crude oil production in the Orinoco Belt jumped from 20,000 to 30,000 barrels per day. The increased production greatly benefits the region, which is facing challenges amidst falling oil prices.
The announcement comes just one day after the minister attended an agreement signing between Venezuela and Aruba. The agreements, which were ratified in front of Aruba Prime Minister Mike Eman, initiate the revival of an old oil refinery and other joint development projects.
Authorities from both governments gathered in Caracas to sign the agreements, which will reopen a 209,000 BPD refinery in San Nicolas, Aruba.
Nicolas Maduro, president of Venezuela, was in attendance as was the energy and petroleum minister and the CEO of CITGO Petroleum Corporation.
The meeting follows several months of negotiations between CITGO Aruba and the Aruban government. The agreement will reactivate operations at the refinery, which had been idle since 2012, through a lease agreement lasting 15 years. A 10-year extension option is available.
CITGO Aruba will be operating the facility, and CITGO Petroleum Corporation will provide the group with services.
The project will transform the refinery into an upgrader for Venezuela’s extra-heavy crude within the next 18-24 months. The project will require an investment of $450-$650 million, which will be secured through external lenders.
Once the refinery has been transformed, the facility will upgrade the extra-heavy crude sourced from the Orinoco Oil Belt into intermediate crude. From here, the oil will be sent to CITGO’s refining network in the U.S. to be further processed. Meanwhile, PDVSA will purchase naphtha to dilute its extra-heavy crude.
The strategic partnership is believed to benefit Venezuela, Aruba, CITGO Aruba and PDVSA.
A complementary project is also being considered that would allow for natural gas in Venezuela’s Paraguana region to be used. Natural gas would not only lower costs, but also reduce refinery emissions.