Venezuela, Aruba resume refinery, pipeline talks

Venezuela and Aruba have resumed talks on reactivating the San Nicolás refinery (pictured) as the South American country attempts to kickstart its flagging oil and gas industry.

Officials discussed a plan to process 200,000b/d of heavy crude at the facility and build an associated natural gas pipeline between the countries, Venezuelan state oil company PDVSA said in a statement on Friday.

It said the meeting, which included Venezuelan oil minister Manuel Quevedo and Aruba's prime minister Evelyn Wever-Croes, sought to "strengthen investment and growth plans" through the Petrocaribe regional oil alliance.

The San Nicolás refinery has been idle since 2012 when then-owner Valero Energy declared its operations were no longer profitable.

In 2016, the US refiner transferred ownership to the Caribbean nation, which signed an agreement with PDVSA subsidiary Citgo Petroleum to reopen and upgrade the complex at a cost of US$450-650mn.

The revamp would allow PDVSA to turn extra-heavy oil from Venezuela's Orinoco belt into synthetic crude and send it to Citgo's refining network in the US for further processing.

Meanwhile naphtha would be sold to PDVSA for use as diluent for its extra-heavy crude, according to the Venezuelan company.

Last year the IMF warned of a "high" likelihood that the refinery overhaul would not proceed amid a severe recession in Venezuela.

Oil production, which accounts for around 95% of the OPEC nation's export revenue, has fallen to a six-decade low, throttled by years of mismanagement at PDVSA, dwindling investment and hyperinflation.