As part of its $2 billion arbitration award, US oil major ConocoPhillips has received court attachments freezing PDVSA Caribbean assets and can now move to sell them.  Wikimapia photo.

PDVSA Caribbean on Curaçao, Bonaire and St. Eustatius targeted by ConocoPhillips

ConocoPhillips is in the process of taking over some PDVSA Caribbean assets after the US oil giant was granted a $2 billion arbitration award to compensate the firm for the nationalization of Conoco’s projects in Venezuela, according to Reuters’ sources.

Conoco has targeted the Venezuelan state-run oil company’s facilities on the islands of Curaçao, Bonaire and St. Eustatius.  According to Reuters, these facilities accounted for about one-quarter of Venezuela’s oil exports in 2017 and play key rolls in processing, storing and blending PDVSA’s crude for export.

The sources say Conoco has received court attachments freezing the assets of at least two of the facilities and can now move to sell them.

PDVSA Caribbean assets include the 10-million barrel Bonaire Petroleum Corporation (BOPEC) terminal on the island of Bonaire.  The facility handles PDVSA logistics and fuel shipments to its customers, particularly in Asia.

PDVSA and the company’s majority-owned Citgo, lease a refinery and storage terminal on Aruba.

Finally, PDVSA rents storage tanks at the Statia terminal on the Caribbean island of St. Eustatius.  The facility, owned by US NuStar Energy, is holding over 4 million barrels of PDVSA crude which has been retained by court order, according to Reuters’ sources.

Chris Cho, spokesman for NuStar says the company is aware of the order and “assessing our legal and commercial options”.  He adds NuStar does not expect the court matter to impact its earnings outlook.

The Conoco move will impact the embattled oil company and Venezuela itself.  The South American country is mostly dependent on oil exports, which are down by about one-third since its peak.  In the first quarter of 2018, refineries in Venezuela ran at just 31 per cent of capacity.

As well, the country is now in a deep recession and its citizens are suffering from severe shortages of medicine and food and many people have fled Venezuela.

Shipments from Bonaire and St. Eustatius terminals accounted for about 10 per cent of PDVSA’s total exports, according to company accounts.  The exports of crude and fuel oil were mostly shipped to Asian customers, including ChinaOil, Zhenhua Oil and Reliance Industries in India.

Conoco also attempted to attach PDVSA inventories on Curaçao, which is home to the 335,000 barrel per day (b/d) Isla refinery and Bullenbay oil terminal.  According to the report, the order could not be immediately enforced.

Curaçao operations accounted for 14 per cent of PDVSA’s exports in 2017, including products exported by the Isla refinery to Caribbean islands and crude from the Bullenbay terminal to global customers.

Reuters reports PDVSA and the Venezuelan foreign ministry did not respond on Sunday to requests for comments.

“Any potential impacts on communities are the result of PDVSA’s illegal expropriation of our assets and its decision to ignore the judgment of the ICC tribunal,” Conoco said in an email to Reuters.

ConocoPhillips says it will work with those communities affected by the court decision and resulting takeovers to address any issues that may arise.

PDVSA and the Venezuelan foreign ministry did not respond to requests for comment. Meanwhile, Dutch authorities said they are assessing the situation on Bonaire.

On Friday, PDVSA ordered its oil tankers sailing in the Caribbean to return to Venezuelan waters to await instructions, according to documents reviewed by Reuters.

“This is terrible (for PDVSA),” a source familiar with the court order of attachment told Reuters. PDVSA “cannot comply with all the committed volume for exports” and the actions taken by ConocoPhillips will imperil PDVSA’s efforts to ship crude to China or access its assets in Bonaire.

Conoco’s claims against the South American country and PDVSA in international courts total $33 billion.  A separate arbitration case involving the Conoco’s loss of Venezuelan assets is currently before the International Centre for the Settlement of Investment Disputes, which is a World Bank tribunal.

Venezuela is also facing similar claims from Exxon Mobil over the 2007 nationalization of its projects in Venezuela.