Future of Isla Refinery - refineriadikorsou.comrefineriadikorsou.com/site/wp-content/uploads/2015/02/Future-of... · Future of Isla Refinery November 26, 2015. ... Estimate & Schedule

Multi Disciplinary Project Team

(MDPT)

Status update to

Dialogo Nashonal

Future of Isla Refinery

November 26, 2015

Status report

1. Introduction

2. MDPT & Status of Modernization

3. LNG Terminal

4. Socio-economic impact

5. Next steps Modernization

6. Status of Redevelopment

2012 The Hovensa Refinery in St. Croix is closed

2012 The Valero Refinery (owned by Valero) in Aruba is closed

Studies by Ecorys, Purvin & Gertz, Solomon, Shawn etc, result in:

May 2012 “Plan van Aanpak Isla Raffinaderij, Regering van Curaçao”

Bullenbay area selected as site for new LNG terminal

2015 Aruba Refinery ongoing negotiations to restart it

2015 Hovensa Refinery new lease not effected

December 31st, 2019 current Lease Agreement will expire

2

Important facts

Estimated between 11 – 13 % of GDP

Responsible for 17 % of FOREX (Isla Refinery only)

Good for 1.100 direct jobs (high skilled) in Refinery

Good for 2.000 – 3.000 indirect jobs (medium to high skilled)

Direct impact on Curacao as Bunker hub for ships (FOREX)

Direct impact on Airport as fuelling hub for airlines (FOREX)

Direct impact on Aqualectra & Curoil operations

Key to maintaining our standard of living

3

Background info:

Economic Impact Curacao Refinery

Structure of MDPT

Council of Ministers

Chairman Joint Committee

Werner Wiels

Team Modernization:

• MOU

• Scope of modernization

• Reduce environmental impact

• New units

• New LNG terminal

• Manpower master plan

• Maximize use of local

manpower

• Heads of Agreement

• Attract Investor(s)

• New Lease agreement

Team Redevelopment:Hybrid and Fall Back scenario

• Create new opportunities to use

refinery site

• Financing aspects

Project support

• Secretary

• Logistics

Communication

• PBS

Project based

Consultants (a.o.)

• KPMG

• Amec Foster Wheeler

• Poten & Partners

• E&Y

MODERNIZATION

Approach Modernization: Original Timeline

.

Oct16

2014

Quick scan

SOS

Implementation chosen strategy

Negotiations

Kick-Off

meeting

Government Approval

0 2

Prospectus

Preferred

partnerLong list of potential

partners

Task A: Preparation

Task B: Selection of Strategic Partner

4 6 8 0 842 106

Investment

LNG Terminal

Estimated

500 MM USD

PARIC

■ “Delayed Coker Unit”

■ Reformer■ Hydrotreater■ Integrated

Utilities■ Environmental■ LNG as fuel

■ USD 2.9 bln■ IRR 20%

PURVIN & GERTZ

■ Continuation with PDVSA preferred

■ 5000 Thermal cracker with

■ Integrated Utilities

■ LNG as fuel

■ USD 3.1 bln■ IRR 12.6%-15.3%

ECORYS

■ 5.000 TermalCracker with

■ Integrated Utilities, NEWCO LNG case

■ USD 3.1bln■ 70/30 DE ratio■ IRR >15%■ 300 jobs

ABN AMRO

■ Revamping and new Delayed Coker and hydrotreatingunits

■ USD 1.95 bln

Status

Technical audit & remaining life study ongoing

RFP for new Strategic Partner Refinery (Investor) in progress

RFP for new LNG transshipment facility at Bullenbay in progress

New Gas Pipe line from Bullenbay to Refinery designed (for LNG supply)

New stricter Environmental Regulations being prepared (AFW)

Status

9

Negotiation mandate issued by Government of Curaçao to MDPT

Head of Agreement draft issued to PDVSA in November 2014 being

negotiated

October 1st, 2015 kick off of RFP for new LNG Terminal

Regular information sessions with stakeholders

Status

10

More than 16 investors interested in financing

refinery modernization

More than 18 investors interested in financing

LNG Terminal

11

Make refinery viable for 20 to 30 years

Reduce environmental impact by using LNG as fuel

- Remove sulphur from products being produced

- Comply with EURO 4 norms and future EURO 5 / 6

- Increase salability of products

- Improve refinery margins

12

Objective of Modernization

- LNG as new clean fuel for the Refinery

- At least 12 new units for direct refinery operations

- At least 15 new units to deal with the environment

- Revamp of 5 existing units

- Demolition of at least 5 old units

- New buildings, roads, piping, training facilities

- Upgrading of utilities and power distribution

13

Characteristics related to Modernization

Project Life CycleExpected Accuracy Range

FEL-1: Screening

Phase

FEL-2: Conceptual

Phase

FEL-3: Scope

Definition & B.Eng.

Phase

Tender, Bid &

Award Phase

Design, Procurement &

Construction Phase

Screen

Estimate &

ScheduleFeasibility Studies

for Screening Estimates

Sub Studies

New Business Ventures

Conceptual Phase

Approval

Review study

Conceptual studies

& Engineering

Conceptual

Estimate &

Schedule

Definition Phase Approval

Review study

Basic Engineering

Basic Engineering

Estimate &

Schedule

Prepare Tender

Document

Contract Award

Detail

Engineering

Tendering

Bidding

Evaluation

Selection

Equipment & bulks

Procurement &

Manufacture

Construction

10

3020

40

50

60

0

-30-20-10

Operational inputs to

P&ID’s equipment

lay out etc.

50

3015

9 5

-30

-20-10

-6 -3

Percent

deviation from

estimate

Current TIC Estimate

Approval/

Agreement

Class 3Class 2 Class 1Class 5

-40

Commissioning

Start-up

Front End Loading Phase 3 (FEL-3 or FEED)Schedule ( less optimistic scenario)

Basic Engineering Package & Preparation EPC Tender Document

Detailed Feasibility

EPC Tender/Award

Project Management Contract

4th Qtr 2015

1st Qtr 2016

2nd Qtr 2016

3rd Qtr 2016

4th Qtr 2016

1st Qtr 2017

2nd Qtr 2017

3rd Qtr 2017

4rd Qtr 2017

Government Agreements

Fiscal Terms Agreement Strategic Partner

Project Company

Shareholder Agreement

Final Investment

Decision (FID)

Project Financing

UpdatedNuisance Permit

Valuation Refinery & CRU

PartnershipStructure

B.EngTender/A

ward

LNG RFP

H2

PLANT

CD2

CD3

DHTRevamp

MHC

FCC

Revamp

NEW

CCR

NEW

DHT

NEW

SPLIT

NEW

POST

TR

GA

SO

LIN

EP

OO

LG

AS

OIL

PO

OL

HVY NAPHTHA

GAS OILS

NEW

H2

PLANT

C3

C4

LCCG

HCCG

LCO

NEW

MHC

CRUDE

Existing units

New units

Revamped units

NEW

ISOM

FP1/2

HV6/7

HV8

NAP

LUB

PAR

LUB

NEW

DELAYED

COKER

NEW

NAPHTHA

HDT

NEW SLURRY

SETTLER

LCGO

HCGO

EXT

EXT

ALKY

COKER/MHC

NAP TO CCR

COKER/MHC NAPHTHA

RFY

FUEL

COKE TO

EXPORT

MHC NAPHTHA

SS

NEW

SPLIT

GO

GO

NEW AUXIL.AMINE / SRUN2 / TAIL GAS

Simplified Block Flow DiagramNew Refinery Configuration

Impact LNG Case: LNG as the new fuel

LNG will significantly reduce air emissions from CRU, Aqualectra

and Isla

Isla will also need LNG as feedstock for making hydrogen

Hydrogen is needed to “clean” the products (hydro treating)

LNG can replace other fuels on Curaçao (for transportation, cooking

and other uses)

Projection of New LNG Terminal

Using LNG: Less Environmental Impact

Natural gas significantly reduces emissions of sulfur oxides, nitrous oxides, carbon dioxide, heavy metals and particulates to levels that comply with environmental regulations

Schedule for RFP Process LNG Terminal

2015

December

2016

JanuarySeptember October November February March AprilContractExecution

Kick Off Meeting/Workshop 1

Draft RFP (Draft Report 1)

Workshop 2

Final RFP Issuance (Final Rep. #1)

Bid Prep. time (Bidder activity)

Evaluation of Bids (Rep. #2)

Workshop 3

At least 4.000 temporary jobs to be created for at least 3 years

Pipe fitters

Plant Mechanics

Machine Mechanics

Welders

Concrete workers

Refractory workers

Scaffolders, Insulators, Gritblasters, Painters

Electricians

Instrumentation

Industrial Cleaners

Firemen, Supervisors

Equipment Inspectors22

Socio-Economic Impact of Modernization Work Force Development

Massive movement of local personnel to the Refinery

Increase in number of local skilled workers

More revenues for local service providers

Spin-off effect on many other industries, importers, etc.

Increase activity of hospitality sector

23

Socio-Economic ImpactModernization

Macro socio-economic impact

Government bonds will reach maturity

Expiration of Offshore regime

Refinery contract with PDVSA will expire

By 2019, all debt securities of the former Netherlands Antilles will have matured, whereas the bonds issued on October

2010 will start maturing as well

Current lease contract with PDVSA expires on December 31, 2019. The contract will be automatically extended for a period

of 10 years, unless notice if given not to renew it

Curacao’s offshore regime will expire in 2019. An issue of concern for offshore companies as well as offshore banks

Important events:

2019

1.

2.

3.

Next steps

Select Third Party Investor/Technical-RFP

Select Investor/Constructor/Operator for new LNG

transshipment facility at Bullenbay

Total cost and financing issues to be negotiated

Fiscal issues etc. (Government)- draft ready

Reach a new Lease Agreement

Create separate Foundation for the Work Force

Development

Execute the Work Force Development

REDEVELOPMENT

Model for land development updated and finish

Six (6) Redevelopment Scenario’s defined

Hybrid Scenario is best of both worlds

TOR being made to do a feasibility study of 60 hectares

development at Ex-Marchena Yard

27

Status

28

DRAFT REPORTWork in ProgressSummary scenarios under review

High-level financial insights (Note that scenarios are still under construction, differences may result due to new insights and validation of assumptions)

3. Refineryshut-down, clean + dism&

redevelopment4. Hybrid scenario

5. Industrial Park scenario

6. Maritime scenario

Annual revenues

RDK

Total capital required

RDK

Total Project

investment

Scenarios

Total annual GDP

contribution

Total annual Job

contribution

Temp/10y-Avg:US$ 10m

Perm/End: US$ 12m


Perm/End: US$ 29m

Capital: US$ 680mDividends: none

Capital: US$ 20mDividends: US$ 18m

Investment: US$ 4.0B


Temp/10y-Avg:US$520m

Perm/End:US$ 298m


Perm/End:US$ 518m

Temp/10y-Avg:2.600FTE

Perm/End:4.300FTE


Perm/End:7.000FTE

2. Refineryshut-down, Clean-up+

dismantling

Temp/5y-Avg: none

Perm/End:none

Capital: US$ 727mDividends: none



Perm/End:none


Perm/End:none


Perm/End: US$65m




Perm/End:US$ 904m


Perm/End:12.700FTE


Perm/End: US$68m




Perm/End:US$ 809m


Perm/End:11.200FTE

TotalannualFOREX

contribution

Temp/10y-Avg:US$ 167mPerm/End:US$ 117m


Temp/5y-Avg: US$ 61m

Perm/End:none



Currentsituation

Current:US$ 20m

Capital: unknown Dividends: unknown

Investment:unknown

Current:US$ 220m

Current:2.700FTE

Current:US$ 30m

Scenario 1 covering a shut-down of the refinery without any economic activities will have no contributions to the aboveKPI’s

Landmap

29

DRAFT REPORTWork in ProgressSummary scenarios under review

Total GDP impact - under the scenarios 4 through 6

4. Hybrid scenario 5. Industrial Park scenario 6. Maritime scenario

3,000

2,500

2,000

1,500

1,000

500

0

2017 2022 2027 2032 2037 2042 2047 2052 2057

US

D' m

illio

n

GDP overview - temporary and long term added

valuePermanent - GDP

Temporary - GDP

Estimated GDP of current refinery area

0

3,000

2017 2022 2027 2032 2037 2042 2047 2052 2057

US

D' m

illio

n

GDP overview (temporary and permanent) -

Industrial Park

0

3,000

2017 2022 2027 2032 2037 2042 2047 2052 2057

US

D' m

illio

n

GDP overview (temporary and permanent) -

Maritime

current refinery area

Scenario: ‘Hybrid’

WIN-WIN

31

ISLA West Development

N

N

32

Comparison ISLA West with other Industrial Areas

33

Questions & Answers

Documents

Future of Isla Refinery - refineriadikorsou.comrefineriadikorsou.com/site/wp-content/uploads/2015/02/Future-of... · Future of Isla Refinery November 26, 2015. ... Estimate & Schedule