Draft:Isla Refinery

Isla Refinery (Curaçao)

Isla or Shell Refinery

Location	Willemstad, Curaçao
Refinery details
Owner	Government of Curaçao
Opened	May 23, 1918
Closed	December 31, 2019
Area	13 km
Capacity	290,000 barrels per day (46,000 m3/d)
No. of employees	300

Isla Refinery

The Isla Refinery (also known as the Shell Refinery) was a Royal Dutch Shell refinery built in 1915 in the deep-water harbor of Curaçao called Schottegat. The refinery allowed access to process crude oil from the Venezuelan Maracabio Basin. It went out of commission on December 31st of 2019 due to heavy U.S. sanctions and a lack of crude feedstock.

History

After the discovery of huge oil reserves in the Maracaibo Basin, the shallow waters blocked deep-draft ocean vessels from transporting crude oil. So the Royal Dutch Shell company saw that the island of Curaçao offered deep harbors also known as the Schottegat, as well as a stable Dutch legal system to put their oil refinery. After Shell acquired the Asiento peninsula, they started construction in 1915 and processed the first oil cargo on May 23, 1918. The company went under the name of Curaçaosche Petroleum Maatschappij (CPM) from 1915 to 1925.

Fence of CPIM oil refinery in Curacao

During the1920's -1950's the Isla Refinery became one of the largest in the world, creating a booming economy and middle class while also drawing in thousands of migrant workers from the Caribbean, South America, and Europe. In 1925, the Royal Dutch Shell company replaced the acronym CPM with CPIM. During World War II the refinery was a prime asset. The refineries in Curaçao and Aruba supplied around 70% of all fuel used by Allied forces. The vital role of the refineries triggered an attack from German U-boats in 1942. On April 29, 1959 the Shell company officially rebranded CPIM as Shell Curaçao N.V. Shrinking profit margins made Shell aggressively automate is systems during the 1950's and 60's, it slashed its workforce by around 75%. With the workforce cut, Shell transferred the remaining labour duties to low-wage, third party sub-contractors. The racial and wage discrimination caused a massive labour strike on May 30, 1969 led by prominent union figure Wilson Godett.

In 1985, due to low global refining margins and local friction, shell decided to pull out, but couldn't leave Curacao in economic despair. So, on September 23, 1985 Shell sold the refinery to the Curacao government for one Antillean guilder or one dollar. On Novermber 1, 1985 Shell completely moved out letting the Curaçao government fully take over. The Curaçao government immediately set up the state company Curacao Oil (Curoil) N.V. to manage distrobution and leasing the refining operations out to Venezuela's PDVSA. The Curaçao government leased to Petróleos de Venezuela (PDVSA) and the refinery formally became known as Refineria Isla. The oil refinery left a lasting impact on the environment, like the asphalt lake. The asphalt lake is a 52-hectare basin containing 1.5 million tons of hazardous waste, accumulating since World War II. Due to Venezuela's economic collapse, and strict U.S. sanctions the PDVSA ran out of crude oil feedstock as well as stock. The refinery fell silent, and permenatly stopped all refinery operations when the PDVSA lease legally expired on December 31, 2019.

Environmental Impact and Struggles

When in the Shell occupation, the refinery dumped around 1.5 million tons of unmanaged heavy asphalt waste into the Buscabaai creating a 52 hectare lake of black asphalt. When Shell gave the company to the governmenet of Cuarçao, the contract exempt Shell from paying for future enviormental cleanup liability in 1985. When the government leased the refinery to PDVSA, they produced relentless soot and sulfur dioxide (SO₂). This caused many civillians in the nearby area to get asthma, permenant lung damage, and even 18 residents living downwind every year to die each year.

After the first wave of damage from 2007-2008 the Curaçao court threatened to shut down the plant due to its high emissions, and even demanded the PDVSA to spend up to $2 billion dollars to upgrade the technology and a massive cleanup site, but the mandate was repeatedly ignored.

A Landscape shot of the Isla Refinery

On June 9, of 2015 Dutch media confirmed that the green substance was carcinogenic. Months prior, residents of the Wishi neighborhood noticed a green substance accumulating on lampposts, cars, and fences that faced the refinery. When the Netherlands Organization for Applied Scientific Research (TNO) released to the public in June, they revealed that the green substance was a mixture of heavy metals and consisted of a specific industrial chemical known as vanadium pentoxide (V₂O₅) as well as nickel (Ni). Following the fallout groups like Clean Air Everywhere and Stichting Mens en Milieu op Curaçao (SMOC) improved the fight for a better enviorment. In August of 2015 a Curaçao court ruled in the residents favor and pointed out the the operator of the refinery, PDVSA, was blatant to the environmental impact they were causing. The court threatened to fine the company around $50 million dollars if PDVSA didn't reduce their SO₂ and particulate matter emissions. PDVSA ignored the court orders and continued production, despite the warnings. Due to the economic collapse of Venezuela and U.S. sanctions against the oil refinery Venezuelan crude ships dried up, maintenance ceased immediately, and processing stoped entirely. Due to all of the issues the green substance frequented less, which made people not raise suspicion of the refinery.

In May of 2018 ConocoPhillips obtained $2 Billion dollar international arbitration rewards against Venezuela for the illegal export of their assets. ConocoPhillips asking the Curaçao courts to seize of all of PDVSA assets and oil inventories. The act completey stopped the refinery of any commercial business. The company was unable to start up buisness again, and it faced the end of its 34 year lease on Decmeber 31, 2019, completely closed the refinerys doors. The closing of the company ended years of continuous air pollution.

After the closing the refinery in 2019, the Curaçao state-owned refinery company Refineria di Kòrsou (RdK), finally negotiated a settlement agreement with the PDVSA around late 2023, which were backed by sanction exceptions from the U.S., for PDVSA to agree to a $450 million dollar oil-for-debt arrangement for the next 10 years. This agreement would help the refinery with its outstanding liabilities, former employee obligations, and operational debts.

Currently the government is looking for ways to modernize the facility and maybe partially reopen the facility. Many attempts and deals have been made like the Oryx Petroleum Deal and the 2Bays Energy Attempts. The Oryx Petroleum Deal, is a deal where Curaçao signs a Memorandum of Understanding with Oryx Petroleum to maybe restart the refinery, which is partially backed by Qatar's sovereign wealth fund. The 2Bays Energy Attempts were attempts by Curaçao to execute limited transactions to produce asphalt, heavy naphtha, and gasoil safely under modern, and more stricter rules, but Curaçao's been waiting on the Office of Foreign Assets Control (OFAC) permits from Washington.