Valero to Convert Aruba Refinery to Terminal

Valero to Convert Aruba Refinery to Terminal
Valero Energy Corporation announced Monday that it will further reduce operations at its Aruba Refinery and reorganize the site as a refined products terminal.

Valero Energy Corporation announced Monday that it will further reduce operations at its Aruba Refinery and reorganize the site as a refined products terminal.

"We believe that Aruba has the assets to compete as a world-scale crude and refined products terminal," Valero Chairman and CEO Bill Klesse said in a press release.

"With both deepwater berths and smaller berths, the terminal will have the flexibility to load the very largest crude ships," continued Klesse. "In addition, the scale and mixture of tankage will permit commercially attractive storage opportunities for our customers. Aruba's proximity to growing markets and its business-friendly political environment make it an ideal location for our new terminal operations."

Converting the Aruba Refinery to a terminal will "require a considerably smaller workforce," Valero stated in its announcement. The company did not specify to what extent it will trim its headcount at the facility, but it anticipates the reorganization and workforce reductions will conclude before the end of the year.

Valero noted that its human resources representatives will begin meeting with refinery employees this week to explain the staffing selection for the terminal operations. "A fair and reasonable arrangement will be presented to those employees not selected to be a part of the terminal operations," stated the company, which will provide those individuals with employment transition assistance.

In March of this year, Valero suspended refining operations at the Caribbean facility. It has maintained the refinery in a state that would allow a restart, keeping its employees on the payroll pending the decision announced Monday. In the near term, Valero will continue to maintain the refinery in this state should a prospective buyer step forward.

Operating as a terminal, the facility will continue to supply jet fuel, gasoline, diesel and fuel oil on Aruba. In addition, Valero will engage in third-party terminal services. Also, the company expects to remain a "significant employer" in Aruba as well as make improvements to the facility and dock and tankage upgrades.

"We will continue to work with Prime Minister Eman and his government in this effort," Klesse said. "Our discussions with interested parties, including those facilitated by the Government of Aruba, will continue, and if successful may result in the suspension of the workforce reduction. We greatly appreciate the continued efforts and support from the Prime Minister and his government."

Valero acquired the 235,000-barrel-per-day refinery in 2004. The facility processes lower-cost heavy sour crude oil. According to Valero's website, the facility employs approximaly 780 individuals.

Matthew V. Veazey has written about the upstream and downstream O&G sectors for more than a decade. Email Matthew at mveazey@downstreamtoday.com. Twitter: @MatthewVVeazey

Matthew V. Veazey has written about the oil and gas industry since 2000. Email Matthew at mveazey@rigzone.com

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