A legal dispute between ConocoPhillips and Venezuelan state oil firm PDVSA could leave Curacao’s economically important Isla refinery without crude oil to process, posing a “potential crisis” for the Caribbean island, Curacao’s Prime Minister said on Tuesday.
Conoco has won court orders allowing it to seize PDVSA assets on Caribbean islands, including Curacao, in efforts to collect on a $2 billion arbitral award linked to the 2007 nationalization of Conoco assets.
The operations of the 335,000 barrel-per-day Isla refinery, which provides as much as 10 percent of Curacao’s gross domestic product, could be left without crude supplies if PDVSA halts all oil shipments to prevent them from being seized, Prime Minister Eugene Rhuggenaath said in a telephone interview.
“We are aware of the potential risks for the operation of the refinery,” Rhuggenaath said. “A stoppage of the operation would have a devastating impact economically and socially.”
PDVSA has already suspended oil storage and shipping from its Caribbean facilities, according to a PDVSA source and Reuters data.
Curacao is prepared to purchase refined products on the global market to ensure it can maintain supplies for the local population as well as for shipping.
“This is indeed a potential crisis that can very profoundly affect the social and economic situation of our island, and therefore we are always willing to discuss and reach out to relevant parties,” said Rhuggenaath.
He said Conoco has yet to seize any assets. Curacao is still scrutinizing a lien – a legal instrument that paves the way for an asset seizure – because the government’s legal counsel does not fully understand it, he said.
Conoco is also seeking to seize assets on the nearby island of Bonaire, where PDVSA owns a storage terminal. In contrast, Isla is owned by Curacao state-run firms and is leased to PDVSA.
“This is a different situation than in Bonaire,” said the prime minister.
Neither PDVSA nor Conoco have contacted Curacao authorities regarding how the legal dispute could affect the island, according to Rhuggenaath.
ConocoPhillips said it has sought to resolve issues caused by its efforts to collect the arbitration award.
“We have been in touch with the local officials and are working to address their concerns,” spokesman Daren Beaudo said.
“As we said previously, we will work with the community and local authorities to address issues that may arise as a result of enforcement actions.”
PDVSA did not immediately respond to an email seeking comment.
A small island off the coast of Venezuela, Curacao is a constituent country within the kingdom of the Netherlands, with a vibrant tourism industry and deep-water ports used by the oil industry.
During the oil boom years, Venezuelans flooded the island to shop and vacation. But the OPEC nation’s calamitous economic decline in recent years has turned Curacao and neighboring islands into havens for migrants seeking escape from hunger and disease.