WILLEMSTAD - SPS Drilling E&P is denying any breach of contract with Curacao for oil storage at the Bullen Bay terminal, which has been vacant since Venezuela's state-owned PdV departed nearly a year ago.
State-owned Curacao Refinery Utilities (CRU), representing Curacao's refinery owner RdK, signed the one-year contract for 5.8mn bl of storage with SPS on 15 September, and terminated it six weeks later. In an internal employee memo, CRU blamed SPS for failing to comply with the contract in the context of market conditions that were altered by the Covid-19 pandemic.
"SPS never failed to comply with the contract with RdK," SPS indicated. "RdK decided to unilaterally rescind it a month and a half after it was signed."
The company said the main impediment was the terminal's deficient infrastructure to import fuel oil, driving away its clients such as Trafigura,Vitol and PetroChina, among others.
SPS specified that Bullen Bay's pipelines required maintenance and lacked segregation for fuel oil. The terminal also lacked capacity to carry out fuel oil blending, "generating an opportunity loss" and preventing SPS from closing storage deals, the company said.
SPS said it proposed a contract renegotiation with RdK in mid-October, but received no reply.
The pandemic "has put us in an extremely disadvantageous position" in the effort to bring in storage clients, on top of "the technical problems at the terminal," SPS said.
The terminal is not economically viable under current oil supply conditions, SPS added. "The only big crude supplier in the region is a country from which we cannot receive product without incurring sanctions."