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Venezuelan oil company could lose key Dutch Antilles oil terminal because of lack of funds for maintenance

19 December 2017

Authorities on the Dutch Caribbean island of Bonaire have warned Venezuela’s state-owned oil company PDVSA could lose its license to operate an oil storage terminal it owns if it does not soon fulfil maintenance demands by regulators. According to a Reuters report, the company has until January 5 to introduce maintenance and safety enhancements at the terminal or it would be shut down.

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The Bonaire Petroleum Corp (BOPEC) terminal, owned by PDVSA, has a 10-million barrel storage capacity and deep water docks that can load large vessels, vital for the company’s international exports.

A Netherlands Ministry of Infrastructure and the Environment spokeswoman said on December 19 that more secure and safe operations had to be introduced at the site by the ultimatum date.

BOPEC has a backlog of items needed to achieve international standards, she said. If it does not deliver the plan requested by Bonaire’s Living Environment and Transport Inspectorate (ILT), it will have to start emptying the terminal in early February, she said, and cease operations. Ultimately, its operating license could be withdrawn, she added.

Venezuela’s economy is in freefall and PDVSA provides the bulk of the country’s export revenue, but little is returned to the company for much-needed infrastructure and maintenance investment. As a result of this, the company has struggled to retain contracts for storage tanks and docks in the Caribbean due to past payment delays.

PDVSA ships fuel oil produced in Venezuela and Curacao to Bonaire, where it can be mixed at the right temperature and loaded into very large oil tankers. Its main customer is PetroChina.

The dispute between Bonaire and PDVSA started a year ago when a remediation plan for the terminal, including improvements to tanks, pipelines, piers and electrical equipment, was demanded by the government amid an accumulation of environmental liabilities, according to sources quoted by Reuters.

But in recent months, because of lack of maintenance, the Bonaire government has been shutting BOPEC tanks that are no longer safe to operate. By the end of November, only 5 of 21 tanks were in operation, making it difficult for PDVSA to ship fuel oil from the terminal, according to the sources.

Reeling from low oil prices, high inflation and a four-year-long recession, Venezuela last month proposed to restructure $60 billion of its debt.

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