CI TG. 0,,),rdld rduara-7,062, Rehabilitation of the Aruba Refinery. c.d. 2O16. 13y.-nica-rn/3

Transcription

1 0,,),rdld rduara-7,062, 13y.-nica-rn/3 17X2 i c.d. 2O16 STATEN VA ARUBA Ingek. C It JUL MS Volgnr. :5J goel CI TG. Rehabilitation of the Aruba Refinery Ministry of Economic Affairs, Communication, Energy and Environment July 4, 2016

2 General Terms Business Model Lease of the Refinery, Terminals & Marine Operations $10 M (annually, first three years) Lease Payment $18.5 MM (annually, as of year 4) Term Fifteen (15) years, with a ten (10) year extension Rehabilitation Period As of August 1, 2016 commencement of train #1 (18-24 months) followed by train #2 (12-18 months). Capacity 209,000 barrels per day Capital Projects All CAPEX, Environmental CAPEX and NG Infrastructure will be performed during Rehabilitation Operations CITGO will operate the Installations 600 direct employees and 400 thru base-load contractors Labor (total employment est max during rehabilitation) RdA responsible to purchase product at the loading rack and Local Market distribution for the local market

3 Agreements Structure Refinery Lease Agree sit [ Terminal Lease lakeement mi Service _greemenk J-)Di n...z PairEz,lit Minister-President Minister Eman Mike de Meza Land Aruba Land Aruba Refineria di Aruba N.V. Nelson Martinez CITGO Petroleum Corp. Umbrella Dispute Settlement Agreement Eulogio de Pino CITGO Petroleum Corp. PDV Holding Inc.

4 Aruba Project Corporate Structure PDV Holding, Inc USA CITGO Holding, Inc CITGO Aruba Holding, LLC CITGO Petroleum Corp. ARUBA Lease Agreements Service Agreement CITGO Aruba Refineria di Aruba Refining, NV (RdA) NV CITGO Aruba Marine CITGO Aruba Operations, NV Terminal, NV CITGO Aruba Su NV

5 Business Model: Aruba as EHC Upgrader Diluent Recycle 54 kbpd :Diluent EHC Naphtha Distillate 209 kbpd DCO 125K BPD Synthetic Crude At Desired Gravity VGO 155 kbpd Vacuum Residual Current Reserves About 300 Billion EHC & 20 Billion Conventional Current Production Current Upgraders 2.3 MMBPD and additional Production only via Upgraders 4 at Jose Complex with combined capacity of 630 kbpd; Aruba to add another 155 kbpd. Aruba Upgrader Cost $700 MM vs $8,000 MM (new) Timing 2 year vs. 6 years (new)

6 Refinery and Terminal Lands Exhibit i' '1 ifiiii;i01,:;11;).11011[ '-'''. if,, 111,111 '41lik CON7INUP176N SAN NICOLAS 11,1,KBOUR =a, 1 Graphic Scale CARIBBEAN S E A ns.rc Graphic Sepia, 'K It3 v.0 Terminal Lands Refinery Lands LEGEND: 'Mr i7:17131 M va NN [AGO. HEIGHTS c:.1 i "

7 CITGO leases "as is where is" CAPEX and OPEX Ownership Marine Operations Operations and Ownership Any and all pre-coastal Existing Environmental Conditions were exonerated in 1989 ( ) Aruba to perform Housekeeping obligations together with Valero; compensation to be discussed with Valero ( ) CITGO liable for environmental conditions after Effective Date (2016 onwards) CITGO to be responsible for CAPEX ($650-$750 MM), NG ($200MM) and OPEX (approx. $400MM) Aruba to own the Installations including the capital improvements. CITGO to own some movables acquired during the Term of the Agreements. CITGO to exclusively manage the Marine Operations. APA to manage the Pilotage Services.

8 Special Tax Regime Labor Regime Taxes and Labor Profit Tax Rate 10% on Profits up to $100MM; 6% for Profits greater than $100MM Minimum Annual Profit Tax $10MM; BBO/BAZV exemption (same as Valero) Import & Export Duties exception on all hydrocarbons, machinery, and equipment for Refinery (same as Valero) Excise tax exception on fuel to be used for running the Refinery (same as Valero) Aruban employees will have preference, if qualified CITGO will have a max 20% Expat Headcount for employees CITGO has discretionary right to employ expats for Specified Key Positions, notwithstanding local market

9 Modern Environment, & Safety Standards Environmental Performance Contractual Obligations At Discretion Monitoring & Reporting Obligations agreed upon No Obligations Soil, Ground Water & Marine Baseline Study prior Start No study done Investigation Up, during and the end of term Soil, Ground Water & Marine NG as Primary Fuel No restriction in fuel type Contamination World Bank EHS Standards General requirement Flaring Reporting & Notification No Obligations Requirements Storage Tanks Requirements To comply with strict International standard API-653 & Inspection Interval At discretion

10 Natural Gas and Clean Technologies Micro-Algae Bio-Refinery CITGO will contribute 5.0 MM$ in the bio-refinery Aruba to explore EU funds or private participation Natural Gas Refinery will operate on NG as primary energy source CITGO will develop and implement CAPEX and infra to have a NG Supply during Rehabilitation CAPEX to be funded by CITGO, REPSOL, ENI

11 Valero Release Dismantling CITGO Guarantees Releases and Guarantees Valero will be released of dismantling obligations (1989, 2010 Agreements) Transfer all assets including Terminal ($200 MM) and VMSA (Afl 40 MM) Transfer of Environmental Trust Fund ($12 MM Settlement Sum (TBD) CITGO and Aruba will share the Dismantling costs equally at the End of the Term CITGO will cover all the Dismantling costs in the event of Early Termination PDVH Parent Guarantee for US$ 150MM; Intercompany Service Agreements with CITGO Petroleum Corporation Inc. No change of control

12 Comparison Lease Agreement Curacao and Aruba Lessor CITGO PDVSA Government Revenues Capital Projects Clean Technologies & Green Initiatives Parent Company Guarantee Environmental Standards Fiscal Regime; Annual Profit Tax CITGO will fund all CAPEX, Environmental CAPEX and NG CAPEX RdA not responsible for any funding Refinery will operate on NG as a primary energy source CITGO will co-fund for $5MM the carbon capture project PDVH Guarantee Based on EHS Guidelines For Petroleum Refining, IFC/WB To be regularly evaluated & updated Tax Holiday PDVSA will only fund 100% of Margin Improvement Projects RdK will fund 100% of Environmental CAPEX Not envisioned No Guarantee Standard formulated in No update has taken place since then. RdA & CITGO to split cost at 50% Dismantling each at end of Term. RdK fully responsible for dismantling cost at end of term

13 Conclusions Contribution to GDP 12.4%-15% (AIB) Labor Up to 3000 direct/indirect employment Economic Growth 6.7% in 2016 and 5.7% in 2017 (CBA) Balance of Payments Influx of Foreign Reserves Minimum Afl 90 MM contribution (LB, WB, premiums) of Public Finance Refinery and contractors Minimum Profit Tax of $10MM