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FACT FINDING MISSIE IOV BC 2004 Strategische orientatie (SOS 2005) PDVSA is momenteel bezig met een concernbrede evaluatie van haar raffinagecapaciteit waarbij ook een toekomstvisie mbt de Isla raffinaderij zal worden gevormd. Curaçao dient rekening te houden met het scenario dat PdVSA de raffinage zo lang mogelijk wil voortzetten zonder bovengenoemde investeringen en met zo min mogelijk (onderhouds)kosten. Ook is het verstandig voorbereid te zijn op een “plotseling vertrek scenario” analoog aan het vertrek van Shell in 1985. Zowel Curaçao als PdVSA zullen naar verwachting binnen afzienbare termijn besluiten moeten nemen over het al of niet voortzetten van de raffinage-activiteit. De Strategische orienterende studie zal onder toezicht van gedeputeerde mw. De Jong Elhage en RdK worden uitgevoerd en dient om de economische en maatschappelijke ontwikkeling van Curaçao met en zonder raffinaderij naast elkaar te zetten. De overeengekomen milieu voorzieningen, met een investeringsbedrag van $ 110 miljoen te betalen door RdK uit de huuropbrengst, zijn vastgelegd in het in 1994 verlengde huurcontract en in de Hindervergunning van 1997. Van de milieuvoorzieningen was het grootste deel tijdens het onderzoek niet of niet volledig operationeel vanwege storingen, vervuiling en reparaties. De raffinaderij wijt dit aan “kinderziektes”. Bespreking met Refineria di Korsou (RdK) op 2 november 2004 Aanwezig: RdK : H.Mensche , interim directeur S.J. Maduro, project development coördinator J.A.R. Henriques, technical coordinator W. Kelly, project coordinator Milieudienst Curacao : U.M. Sille , interim hoofd DCMR : W.G.Been

Circa 3/4 van de $110 miljoen investering in IRUP is inmiddels door RdK voldaan met de van Refineria Isla ontvangen huurgelden. Het opgebouwde saldo zal tot tenminste 2019 verder oplopen met jaarlijks $18 miljoen tot $20 miljoen en is bedoeld om te worden gebruikt voor (milieu)investeringen in de raffinaderij. RdK is van mening dat de huidige bedrijfsvoering , voorzieningenniveau en milieunormering van de raffinaderij niet als duurzaam kunnen worden beschouwd. Als er geen structurele investeringen plaatsvinden is er geen toekomstperspectief voor de raffinaderij. Om die reden wordt momenteel gewerkt aan de Terms of Reference van een studie om te komen tot een duurzaam raffinaderij concept, om te kunnen voldoen aan nieuwe produktspecificaties, zoals deze in toenemende mate wereldwijd (momenteel met name in de VS en de EU) verplicht worden gesteld alsmede het voldoen aan internationale milieunormen die veel verder gaan dan de huidige via het huurcontract vastgelegde normstelling. De grotere capaciteit van de centrale is met name nodig ten behoeve van de ingebruikname van IRUP projecten.

AGREEMENT BETWEEN THE GOVERNMENTS AND PDVSA (14 sep 1995) 8.2 Utility services in Emmastad PdVSA staat garant dat the Refinery sells Kodela water en electriciteit!!!!

LEASE AGREEMENT PDVSA AND RDK (14 sep 1995) 3.1 Lease Fee 01.01.1995 – 31.12.1999 milj USD 12 2000-2004 15 2005-2009 18 2010-2014 20 2015-2019 20 (Ys, 2001, zonder wijziging voorwaarden)

Te betalen per mnd binnen 1e 5 dagen aan RdK, anders rente LIBOR + 3% p/y 5.2 PDVSA Onderhoudsplicht conform Standards and Practices 5.6 PDVSA verantwoordelijk voor tijdige vervanging installaties om goed gebruik te garanderen


6.1 RDK recht op inspectie PDVSA meldt RDK shutdown installatie voor onderhoud/inspectie 6.2 RDK recht op technische audits om de mechanische conditie en staat van onderhoud te bepalen Rapport naar PDVSA en meeting om bevindingen te bespreken 6.4 PDVSA verplicht geregeld rapport met info over refinery and its operations aan RDK 6.6 Maandelijkse bespreking RDK PDVSA met overzicht events of significance 8.2 IRUP Management PDVSA in charge of management IRUP. IRUP is MIP (220 milj USD,PDVSA) en SEP (110 milj USD, RDK) 8.5 Power Plant Independent Utilities Produces Scheme, in accordance with special Agreement entered into by The Governments, RDK, PDVSA and Isla (Attachment I) 9.1 Return on expiration lease in a way ..capable of operating in accordance with Standards and Practices. 16 Force Majeur If a fm prevents PDVSA from operating the refinery for more than 6 months ‌geen lease. BOO??????? Dan dus geen lease van 7/12 x 18 =10.5 milj USD????? 19.4 Special termination rights of RDK Isla committed to: a) lease 20 years b) major investment IRUP c) execute other programs to enhance the long term viability of the Refinery

HINDERVERGUNNING ISLA 9.9 Afval mag niet gedeponeerd worden op het terrein anders dan bij de daartoe aangewezen locaties. Attachment F, appendix 2-A Disposal options Disposal of waste: zie zwavel en Bergen in water bij Habaaiwater!!

RDK IMPACT STUDY OF IRUP AND BOO, PWC ISM DEZ, 10 DEC 2002 BOO’s objective: To meet incremental demand for energy caused by the implementation of IRUP Duration: 2000-2003 Capital inv: USD 217 milj/ANG 395 milj Sponsors: RDK en PDVSA Expected additional benefits for Curacao: supply Aqualectra with excess production capacity at favorable terms


PERVIN & GERTZ, OKT 2005 IOV RDK Opdracht: Gebruik refinery na 2019, voldoen aan HUIDIGE normen. UTILITY SYSTEMS (P 13) In 2014 verloopt agreement “at which time the ownership of the facilities reverts to Aqualectra” “Based on discussions with RDK, general maintenance minimum level, new owner would have to increase spending levels at least for a period of time to “catch up” to industry standards (p.22) Remaining facilities life, 4 years No environmental expenditures!! RDK 50% needed to comply with new environmental laws investements, but not operating costs. Keuze upgrading bepaalt of RDK ook moet betalen: zie p81. Kan dus door process configuration rather than the addition of specific environmental treatment units!!! The split in IRUP (margin vs safety and envir) is not very desirable for RdK as there’s no share in profitability improvements, even though safety and envir projects provide needed infrastructure to support the MIP, zie p82 over oplevering ook. BULLENBAAI INKOMSTEN Ca 10-20 milj USD/YR?? P. 34 ev en table IV-6

ECORYS-NEI 2005 IOV RDK ONTMANTELING EN SANERING P. 39-42 310 + 86 = ca 400 miljoen USD, 10 jaar, ca 72 miljoen ANG per jaar VROEGTIJDIGE DODEN SO2 EN TSP (te lage waardes als uitgangspunt!): 18/jr OPTIMISTISCHE ECONOMISCH SCENARIO: NA SLUITING ZAL CA. 75% PERSONEEL BINNEN 2 JAAR NIEUWE BAAN HEBBEN (p.47) Gezondheidsschade: kosten 28 miljoen ANG (p56)

TNO 2007 RDK heeft in 2000 meetwagen met apparatuur aangeschaft om luchtkwaliteit te meten Conclusies Normen luchtkwaliteit fors overschreden Oppervlakte Schottegat ernstig verontreinigd met oliecomponenten, bedreiging waterkwaliteit op andere plekken langs de kustzone Grondwater in putten bewoners punt van zorg Maximaal toelaatbaar risiconiveau in Annabaai ruim overschreden. Minerale olieconcentraties Annabaai MTR overschreden, ecologisch risico. In Annabaai MTR voor benzo(a)pyreen bereikt (kankerverwekkende PAK)


COMMENTAAR BOO-RAPPORT Oude en nieuwe installaties p. 13 BOO-rapport: Problemen vnl met oude Isla installaties: Electriciteit: Generators TA-7 en GT-8 catastrophic failue, GT-9 en GT-10 maintenace Water: SWD 5 moet 250 Tn/hr leveren, levert 25 Tn/hr Stoom: B-75 internal corrosion, out, B-74 needs repair, B-77 catastrophic failure, B-80 maintenace needed, even fuel pomps are in trouble Luchtcompressors: AC 5 en AC 6 catastrophic failure The COD has yet not been declared by the contractual parties, because ISLA has not submitted all the equipment to CUC. This is one of the reasons why the power plant enters into the vicious circle of decline, based on which the project is confronted with increased maintenance costs. The actual capacity of the power plant is less than the contractual capacity. ISLA has pressed the BOO committee to limit the costs as much as possible for the utility supply for the refinery, under the threat of closing the refinery for good . In this regard CUC has informed ISLA that the power plant will not be able to meet its contractual obligations, due to the fact that the different current production assets do have their technical limitations, because of (i) age, (ii) design and (iii) no delivery of the assets by ISLA . This development leads the power plant into a vicious circle of decline. In order to be able to cope with this shortcoming, CUC has proposed to ISLA to open and renegotiate the USA. Until today there has been no positive reply from ISLA. ISLA pays a fixed amount on a monthly basis (take or pay), for the life of the project. There is only a small adjustment for the U.S. and Curacao CPI increase. More or less half of the total production facilities were the existing steam and electricity production facilities of the refinery and the other half is comprised of the newly constructed facilities. The fact of the matter is that as of the commissioning of the new power plant and the turnover date of the existing equipment, TA6 has not yet been delivered to CUC pursuant to the USA.. In other words 10.5 MW of capacity has never been a part of the total contractual capacity base of the utility plant. TA7 has suffered a catastrophic failure in 2009 and is no longer in production. The solution for TA7 (i.e. the replacement of this production unit) will be assessed during the due diligence assessment conducted by RdK. Important factor herewith is the cooperation of ISLA with regard to the CUC restructuring plan. As informed earlier in this report, still no reply from ISLA about this restructuring plan. Reliability criteria and supply to Aqualectra: Considering the different issues at hand, as described above, the total available capacity of the power plant is not enough to comply with its contractual obligations with regard to the electricity supply to the refinery and to Aqualectra. For this reason CUC has supported the CUC restructuring plan as this is presented by the sponsors of the project. As it is stated before in this reaction to the BOO committee report, this restructuring plan has been submitted to ISLA for their consent and cooperation, nevertheless still no reply form ISLA on this important plan. The report states that the total legal structure is quite complicated and the question arises whether some simplification can be achieved in order to have the responsibilities and liabilities in a more transparent matter. Although this opening statement of the legal paragraph can be understood, still it is important for all parties involved to really understand the circumstances under which these contracts have been agreed upon. With the signing of the lease agreement between RdK and ISLA also a special agreement with respect to the "independent utilities producer scheme" has been agreed upon in Attachment I. This special agreement stipulates "inter alia" that if the parties have negotiated in good faith the financial terms and conditions for the BOO and no agreement could have been reached, PDVSA and ISLA shall have the right to terminate the lease agreement and the other government agreements without any further obligations on any of the parties. CUC believes that it is very important for the mind set of all the parties to consider the country risk that has been dealt with and also to put the existing contracts into proper and currently existing context of the time and situation. Since the establishment of the principles amongst the shareholders in January 2010. a number of actions and initiatives have been underway to finalize these principles and create the necessary contractual framework to complete the restructuring process. However, key to this effort remains agreement with ISLA on certain fundamental aspects of the restructuring being developed by the shareholders and the absence to date of any clear commitment from ISLA to support these restructuring efforts has certainly slowed the speed with which the shareholders can reach a conclusion to these issues. -----------------------------


Rafael Ramirez, Venezuelan energy minister and PdVSA president, has said that the firm has not abandoned its commitment to the plant. However, he also stated that at as things stand PdVSA would not commit to any further investment until its legal position in Isla was clarified. In fact, the Chavez regime appears to be creating an international political crisis with Curacao to give Pdvsa an excuse to suspend the lease, which does not expire until 2019. A Curacao court ordered Pdvsa in May 2009 to spend over $1.6 billion to reduce emissions at the 92-year-old Isla refinery. Pdvsa doesn’t have the cash, and it doesn’t want to risk getting saddled with any legal claims for cleaning up the environmental disaster zone that surrounds the refinery.

Centralbank BNA 2008 De levensvatbaarheid van de raffinaderij kan voor de lange termijn alleen worden gegarandeerd met een omvangrijk en gebalanceerd investeringsplan. Gegeven de omvang van de investeringen zou een aanzienlijk deel hiervan moeten worden gefinancierd door de huurder van de raffinaderij. De investeringen en de financiering ervan zijn cruciale onderdelen van de onderhandelingen over een verlenging van het leasecontract of een mogelijke privatisering van de raffinaderij.

Curacao – Isla Refinery: “PdVSA Intends To Stay After 2019” The Venezuelan State-owned Oil Company PdVSA (leases and operates the Isla Refinery) intends to stay in Curacao after the current lease expires in 2019, according to Isla Refinery spokesperson Kenneth Gijsbertha. PdVSA reportedly demands clarity concerning the Isla Refinery and BOO (Build, Own and Operate) plant operations. A June report indicated the Isla refinery has lost US $52 million since an unexpected shutdown of the BOO plant - owned by Utility Company Aqualectra and Japanese Trading Company Marubini – on March 1. The BOO which produces electricity, steam, desalinated water, and compressed air for the Isla Refinery and up to several megawatts for the national grid is currently operating at approximately 20%. Phase one and two of an Adequacy Project Curacao Isla Refinery (PARIC) investment plan were reportedly approved by PdVSA. The entire plan includes an estimated US $1.5 billion investment that could turn the refinery into a modern plant within five years. Future phases require Curacao government approval and will probably include lease contract negotiations; talks between PdVSA and the government have been very strenuous. The main PARIC goals are improving fuel quality, increasing refinery capacity, and meeting environmental standards. PdVSA is still seeking a third partner to participate in the refinery operations. Also, PdVSA will honor the current contract until it expires in 2019, Gijsbertha said.

Pdvsa: Big Plans, No Cash *Pdvsa’s debts are also impressive. The company’s direct financial debt climbed to over $21 billion in 2009 from $15 billion at end2008. Moreover, Pdvsa owes $8 billion worth of oil shipments to China, not including any new debt acquired if the joint fund is increased to $20 billion. Pdvsa also owes 76 expropriated services companies about $3 billion, by some estimates. Pdvsa also is in international arbitration proceedings with Exxon and Conoco, which together reportedly are pressing compensation claims of at least $20 billion against Pdvsa. Higher oil prices won’t help Venezuela. The regime’s “break-even point,” the oil price at which its fiscal revenuers and crazed spending balance out, is now estimated at over $90/bl and that’s a low-ball estimate. Anyway, Pdvsa’s crude production has collapsed below 2.3 million b/d, for a net output loss of at least 1.5 million b/d of crude oil (over 20,000 production wells are shut down from zero maintenance). The numbers say that 1.5 million b/d of lost crude production capacity x a price of $70/bl today x 365 days = over $38.32 billion of oil export revenues that Venezuela cannot realize. The foreign oil companies know this. They will leverage Pdvsa’s financial weakness to their advantage if at possible, which is only natural. But the companies also know that Pdvsa is, at bottom, unreliable and not to be trusted.


VOMIL Tijdens de onderhandelingen voor het 20-jarig huurcontract van Refineria Isla in 1994 moest er ook een oplossing worden gezocht voor de nutsvoorzieningen. De bestaande installaties voldeden niet meer aan de eisen en behoeften van de raffinaderij. Zo is het BOO concept tot stand gekomen. De CUC zal electriciteit, perslucht, stoom en gedestilleerd water gaan leveren aan de Isla en ook electriciteit aan de Curaçaose gemeenschap. Daartoe neemt de CUC de energiecentrale en andere nutsinstallaties van de raffinaderij over. De meeste installaties worden gerenoveerd en er komen ook nieuwe, efficiÍnte installaties ter vervanging van diverse andere. De bestaande nutsvoorzieningen zijn momen-teel verantwoordelijk voor circa 40% van de totale uitstoot van de raffinaderij. Het nieuwe nutsbedrijf van CUC, komt op dezelfde locatie waar de huidige energie-centrale van Refineria Isla staat; de installaties worden gedeeltelijk vernieuwd (vervanging van drie ketels) en de rook-gassen van deze nieuwe ketels worden via een 200m hoge schoorsteen afgevoerd. Indien de gestelde milieunormen op leefniveau, die overeenkomen met Ameri-kaanse en vergelijkbaar zijn met EU normen, ondanks de genomen maatregelen niet worden bereikt, dan biedt de hindervergunning de mogelijkheid om additionele maatregelen te treffen. Hiermee is al rekening gehouden en er is een plaatsingsmogelijkheid aangebracht voor een rookgasreinigingsinstallatie voor o.a. het ontzwavelen en het afvangen van de rookgassen


HOOFDPUNTEN BESPREKING CONSTANCIA OKT 2010