Sat | Nov 17, 2018

Venezuelans said to be reconsidering sale of Petrojam stake

Published:Wednesday | June 10, 2015 | 12:00 AM

Well-placed sources say Venezuela is reconsidering the sale of its minority stake in the Petrojam oil refinery after reviewing bid proposals to operate the Kingston-based plant shared by Jamaica.

Jamaica has bids from two parties, both reportedly emanating from China, to finance the expansion of the refinery.

Caracas, which owns 49 per cent of Petrojam through Petroleos de Venezuela SA (PDVSA), had advised a year ago that it was looking for a buyer for its stake and was also said to be considering selling to the Chinese. Oil prices were tanking then, but have since recovered to about US$60 per barrel on the world market.

Petrojam's board has wrapped up its assessment of the bid proposals to expand the refinery, but is awaiting feedback from Caracas before finalising its decision.

"We have sent the proposals to PVDSA as JV (joint venture) partners for their comment and input. We should hear from them shortly," said the source.

As for Venezuela's plan to sell its stake: "They are reconsidering their position because the proposals look good," he said.

Petrojam is not saying whether its plan is to lease the asset to the new investor and over what timeline, or whether the deal under consideration would include selling a portion of its 51 per cent stake to the new partner that it selects.

The planned expansion will enable production and export of LPG, gasolene, and low-sulphur diesel. A bypro-duct, petcoke, is projected to enable the generation of 100 megawatts of cheap electricity.

Jamaica has been trying for a decade to source funding for the expansion of the refinery from a 35,000-barrel-a-day facility to 50,000 barrels, and re-engineer the plant to process heavier but cheaper crudes. One engineering study completed in 2008 had determined that the project would require capital of US$758 million, funds that Jamaica lacked.

The refinery supplies 80 per cent of the local non-bauxite market and 70 per cent of the national market, and is currently selling about 50,000 barrels of refined products per day, as reported earlier this year. Some of the sales are from imports.

Petrojam imports about nine million barrels of crude per year, mostly under concessionary terms from Venezuela. It also imports refined products as needed.

Energy Minister Phillip Paulwell said in April that the new bids for the expansion project were "a complete package" that included the financing.