ORANJESTAD — Mike Eman (AVP) – who is in charge of forming the new government – says that prompt action is required to rescue Valero from its awkward situation. He will consult with PetroChina during the course of this week for a possible takeover or a joint venture. The refinery is currently losing 8 million florins per month and Eman expects that more dismissals will follow within short if a solution is not found quickly.
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Eman spoke at length with Martin Parish, Vice-president Regional Refinery Operations and director Ray Buckley of Valero Aruba on Tuesday. He also stated that he had had contact with Bill Klesse, director of the Texan oil company. The various scenarios to breathe new life into the oil refinery were discussed. The possibilities are being explored on how the company could resume its production on itself. "In that, I was told that this had a fifty-fifty percent chance of success." However, in the meantime Eman is also ‘proactively’ looking for other solutions such as selling the refinery or a joint venture. The Chinese state-owned oil company PetroChina will be approached on the aforementioned as well this week, and Eman had previously indicated – with assistance from the Netherlands – to interest the Mexican state-owned company Pemex in a takeover or a partnership.
Eman said that he had spoken with the departing Minister of Finances and Economical Affairs Nilo Swaen (MEP) on their negotiations with PetroChina. The negotiations between the MEP-government and the Chinese company had foundered last week. This occurred, amongst others, as PetroChina wanted their own employees in the Aruban refinery, did not want to pay taxes and required the same environmental conditions as Coastal. A sale with Valero was not accomplished either as both parties could not agree on the price. Eman wanted to know from Swaen what the latest state of affairs was on the negotiations. "What are the difficult issues which the government could not work out before the elections and what could we do differently in order to succeed"?
BBO fatal
Eman said he had further received confirmation from Valero itself as well as from internal and external experts outside the refinery, that the implementation of the sales tax bbo had been the fatal factor for the refinery’s downfall. AVP had always asserted such, just as other parties had. Eman explains: "2006-2007 was a crucial year. If the government had agreed with the refinery at that time not to levy bbo but a fixed, guaranteed tax amount of 40-50 million florins per year, then we would now have 150 million florins after three years, and Valero would have invested 1.9 billion in the expansion and renovation of the refinery." Aruba could currently receive 200 million florins on bbo as well if it wins the arbitration case on bbo.
Nevertheless, says Eman, investments failed to occur which is why the refinery currently has few production possibilities to make it viable again. "The market is very difficult. Refineries that furthermore have access to crude oil have more viability than those that do not have access to such, which makes it very difficult for them to make a profit in view of the prices.
Eman said he had further received confirmation from Valero itself as well as from internal and external experts outside the refinery, that the implementation of the sales tax bbo had been the fatal factor for the refinery’s downfall. AVP had always asserted such, just as other parties had. Eman explains: "2006-2007 was a crucial year. If the government had agreed with the refinery at that time not to levy bbo but a fixed, guaranteed tax amount of 40-50 million florins per year, then we would now have 150 million florins after three years, and Valero would have invested 1.9 billion in the expansion and renovation of the refinery." Aruba could currently receive 200 million florins on bbo as well if it wins the arbitration case on bbo.Nevertheless, says Eman, investments failed to occur which is why the refinery currently has few production possibilities to make it viable again. "The market is very difficult. Refineries that furthermore have access to crude oil have more viability than those that do not have access to such, which makes it very difficult for them to make a profit in view of the prices.
NEWS ARTICLE TAKEN FROM WWW.AMIGOE.COM