By Janet McGurty
NEW YORK (Reuters) - Valero Energy Corp said on Monday it would convert its shuttered refinery on the Caribbean island of Aruba to a refined products terminal as it continues to seek a buyer for the facility.
The Aruba refinery has been idled at least twice in the past few years, most recently earlier this year, due to poor profit margins that have plagued refiners in Europe, the Caribbean and on the U.S. East Coast.
"It is perhaps the best they can do for the facility unless a buyer is found," said Mark Routt, senior consultant at KBC in Houston. "This shutdown will mean a significant loss in jobs but it is difficult for the refinery to compete when it is using fuel oil for fuel when natural gas is so much cheaper for continental refiners."
The work is expected to be completed by the end of 2012.
Conversion of the Aruba site follows the lead of the massive Hovensa refinery on St. Croix. Like Valero, its joint-venture owners, Hess Corp and Petroleos de Venezuela, hope to restore the site to profitability by taking advantage of geographic location and shipping facilities to convert it to a terminal.
In May, Valero received non-binding bid of $350 million plus working capital from a unidentified buyer for a refinery.
Sources familiar with the negotiations said the approach had been made by PetroChina. It was the second time in two years the Chinese company had discussed the purchase of the plant, which is located near Venezuela, China's fourth-largest crude supplier, sources said.
(Reporting by Janet McGurty; Editing by Jeffrey Benkoe and Dan Grebler)