Due to inadequate margins resulting in financial losses, Valero Energy Corp. is suspending operations at its Aruba refinery. Valero, a Texas-based independent oil refiner, acquired the 235,000bpd refinery in 2004 and is considering operating a terminal and storage facility at the site. The refinery produces intermediate oil products shipped to refineries in the United States and some diesel sold in South America.
As Caribbean refineries lack access to cheap natural gas used as feedstock in fuel production, which helps U.S. Gulf Coast refineries be competitive and they lack the access to the constant supplies of intermediate crude that trades way below global crude prices that the American refineries have to remain competitive.
Valero intends to maintain the refinery in a state that would allow a restart for the immediate future. The Aruba facility has a history of stoppage; built by Standard Oil in 1929, it was shut down by successor Exxon in 1985 and reopened in 1990, purchased by Valero in 2004, it was closed down again in 2009 but restarted fuel production in 2011.
Though Valero has reported profits in recent quarters, high oil prices and lower gasoline demand have minimized profit margins.