D66, VVD very concerned about CITGO Aruba deal
25 June 2016
THE HAGUE--The Dutch Government will shortly provide an extensive update to the Second Chamber of the Dutch Parliament on the recent deal between Aruba and CITGO Petroleum to reopen and operate the refinery in San Nicolas. Dutch Minister of Home Affairs and Kingdom Relations Ronald Plasterk made this promise during a debate with the Second Chamber’s Permanent Committee for Kingdom Relations on Thursday on the insistence of Member of Parliament (MP) Alexander Pechtold of the Democratic Party D66.
Pechtold and his colleague Andrť Bosman of the liberal democratic VVD party questioned the deal between the Aruba Government and CITGO, the United States unit of Venezuela’s state-owned petroleum company PdVSA, signed in Caracas earlier this month.
Based on the agreement, CITGO will likely invest about US $400 million to US $600 million to overhaul Aruba’s refinery under a 25-year lease. The Aruba complex could be up and running again within one and a half to two years, CITGO has said.
Venezuela is also mulling building a gas pipeline from the Paraguana peninsula northward to the Aruba refinery. Running the facility on gas will make the refinery more environmentally friendly. Constructing the gas pipeline is a costly affair for which the finances still have to be secured.
Both Pechtold and Bosman referred to the highly unstable situation in neighbouring Venezuela. “The country is on the verge of a civil war,” said Pechtold, who wondered how this would affect the reopening of the Aruba refinery, the associated investments and the plans to build a gas pipeline.
“Of course the reopening of the refinery would be a big boost for Aruba’s refinery, but there are also nature and environmental risks. Besides, there are doubts whether this is financially sound,” said Pechtold, who questioned Venezuela’s financial-economic stability. “Who will pay for the gas pipeline? Besides no one knows for certain that the facility will indeed run on gas in the future,” said Pechtold.
Bosman also inquired about the cost of the pipeline. “The construction of a pipeline is a costly affair, and I am not even talking about the maintenance. All that for an inefficient refinery? I am very worried whether this project is financially feasible. Looking ahead, I see a hole of several billions. Who will pay for that? Certainly not the Dutch taxpayer,” said Bosman.
In answering the concerns and questions posed, Minister Plasterk emphasized that the refinery was first and foremost an autonomous affair of Country Aruba. This also counted for the financial aspects of the reopening of the refinery. He said that as far as he knew the deal was not entirely completed and that the finances for the projected gas pipeline and the consequences for the environment were not clear as yet.
Pechtold and Bosman expressed great concerns about the project. “A bit shady. There are simply too many things that are unclear. I want to know whether there is a deal or not, and I want to know the details of this deal,” said Bosman.
“This is getting me a bit nervous,” said Pechtold, who asked Plasterk if he was willing to look over Aruba’s shoulder in their dealings with this highly complex affair. “The contract involves an extensive document of some 2,000 pages.”
A proactive approach in this regard from the side of the Netherlands would be very wise, also because the complexity of the project, legal, geo-politically and otherwise, would be too large for Aruba to handle on its own, said Pechtold. “I want to prevent that in two to three years we will all say, we should have kept better check.”
Plasterk promised that he would discuss Pechtold’s request for voluntary expert assistance with the Aruba Government. He also pledged to draft a letter to the Second Chamber before the summer recess with the information that he had concerning the CITGO deal.
Pechtold, who pressed Plasterk for this letter, asked that the document contain a sort of “quick scan” with not only information about the deal, but also which consequences the situation in Venezuela could have on the Aruba refinery. “I want to be informed broadly, because I am not at all comfortable on this matter.”