OREANDA-NEWS. Venezuelan state-owned PdV?s US downstream subsidiary Citgo and the government of Aruba are working to conclude a final agreement by 15 May for recommissioning and operating parts of the 235,000 b/d refinery on the Caribbean island, Aruban officials close to the negotiations told Argus.

US independent refiner Valero mothballed the refinery for economic reasons in March 2012.

The Aruba government and Citgo had set a 31 March deadline for concluding a final agreement, but this has been extended "by mutual consent," one official said.

The talks will determine the terms of a 25-year lease.

"There are many technical and financial details that have to be agreed, and these require more time," the official said.

"We are anxious for the refinery to be restarted, but we want to ensure that it is a viable and sustainable operation, and Citgo has similar concerns."

Neither Citgo nor Valero have commented on the negotiations that started in July 2015, after Valero agreed to temporarily suspend the dismantling of the refinery.

Dutch-controlled Aruba lies 29km (18mi) off Venezuela's coast.

The refinery would give cash-strapped PdV another nearby logistical base for offshore blending of its extra-heavy crude from the Orinoco oil belt with light crude and naphtha. The company already leases the Isla refinery in Curacao and leases Caribbean storage.

A Venezuelan official told Argus that PdV is structuring the deal through Citgo because it lacks the financial capacity to execute it on its own.

By leveraging Citgo, PdV ensures lower borrowing costs for any external financing needed to fund the recommissioning. The deal would also move some Citgo pre-tax revenue and profit to Aruba from the US, reducing Citgo's US tax bill, the official said.

When it was in operation, the refinery processed heavy sour crude into distillates and intermediate feedstock. It did not produce finished products.

The Aruba facility is currently used as an oil storage terminal, featuring 63 tanks with almost 12mn bl of total storage capacity.

The facility also has two deepwater marine docks capable of receiving ultra-large crude carriers and six refined product docks, as well as a truck rack for local deliveries.

Aruba's prime minister Mike Eman said in 2012 that China's state-run PetroChina had concluded an "agreement in principle" with Valero to purchase the refinery. The transaction did not materialize, leading Valero to close the facility.