Above: the Valero refinery in Aruba

By the Caribbean Journal staff

Following the closure of the HOVENSA refinery in St Croix last month, another Caribbean refinery will be shutting down.

Valero Energy Corporation announced that refining operations at its 235,000-barrel-per day refinery in Aruba would be suspended.

“We appreciate the diligent and incredible efforts of Prime Minister Eman and his government in helping Valero find an economic alternative that would allow continued operation of the refinery,” Valero Chairman and CEO Bill Klesse said in a statement. “If it had not been for the efforts of the Prime Minister, the refinery would not have restarted in late 2010 and operated over the past 15 months.”

Valero said it had “thoroughly evaluated all of its alternatives” over the past two years. One of those alternatives could be operating a terminal and storage operation.

The closure of the HOVENSA refinery has largely devastated St Croix — it was the island’s single-biggest employer. US Virgin Islands Delegate to Congress Donna Christensen has sought economic disaster status for the territory.

“Our discussions with interested parties, including those facilitated by the government of Aruba, will continue,” Klesse said.

Valero will maintain the refinery in a state that would allow a restart, however, it said.

The refinery is located on 800 acres on the southern tip of Aruba. It was purchased by Valero from El Paso Energy in 2004, and has since invested almost $500 million in the facility.

According to the company, the refinery has been operating at reduced rates because of inadequate margins resulting in financial losses. It cited unfavourable refinery economics, and the outlook for “continued unfavourable refinery economics.”