In Curaçao, it is clear to see that the main industry is oil refining, as evident from the large oil refinery, called the Refineria ISLA Curaçao, located in Curaçao’s Schottegat harbour. Today it is still in operation, nearly 100 years after it was first built by the Dutch government and Royal Dutch Shell company. At the turn of the industrial revolution, Curaçao’s oil refinery was the ideal facility for energy generation. Over the last few decades, however, the refinery has been found to cause profound health effects to Curaçao’s people, especially to those living downwind of the refinery and has failed to meet national and global environmental standards. The refinery may have seemed like a good idea for the island of Curaçao so long ago, but today, based on the current revenues, employment rate, and environmental and public health impact, it does not make sense to keep this industrial facility alive.

At the beginning of the 20th Century a large quantity of oil was discovered in the Maracaibo Basin of Venezuela. Since there were few suitable areas in Venezuela for large-scale oil refining, the Venezuelan government envisioned Curaçao as an ideal location for such an industry because of its attractive natural deepwater harbour which could accommodate large oil tankers, its stable government, and its close proximity to the oil fields in Venezuela. Before this time, Curaçao’s economy consisted of mostly small-scale agriculture and commerce which kept the economy going but was not sufficient for growth and development so the Dutch government was eager to expand its economy. Royal Dutch Shell, a multinational petroleum company created in 1907 with Dutch and British origins, along with the Dutch government began construction of an oil refinery in Curaçao’s Schottegat harbour in 1915 soon after the discovery of oil in Venezuela. It began operation of refining Venezuelan oil in 1918 (Wikipedia Curaçao, 2010). During this time, Curaçao’s economy was transformed into a powerful engine in the heart of the Caribbean which brought new employment opportunities, immigrants from near and far, and wealth to the island.

In 1954, the Netherlands Antilles gained autonomy within the Kingdom of the Netherlands, as Curaçao’s economy was still very strong. Around this time employment at the oil refinery had reached its peak of approximately 12,600 employees but in subsequent years the employment rate dropped substantially due to the introduction of automated technology (MCB Bank Annual Report, 2006). It was evident that this sudden change was felt throughout the society due to conflicts between social groups and calls for job security. After a large and historical protest by locals 1969, Curaçaons of non-European decent attained more influence in government and the private sector (Caribseek Curaçao, 2005).

Over the next several years Curaçao developed a tourist industry and offered low corporate taxes to promote its international development and attract foreign companies to set up holdings on the island (off-shore banking). At this time the refinery was not doing as well as it used to, especially since the 1940s when there was a need for oil to fuel planes during World War II (Caribseek Curaçao, 2005).

Approximately, 70 years after the oil refinery was first built, Royal Dutch Shell decided to sell the refinery to the island government for only 1 guilder and did not accept any liability from any damages resulting from their operations (Currasow, 2007). Rather than force the private Shell company to participate in cleaning up what they had started so long ago, the government accepted this horrible and unfair deal and, in turn, incurred a large debt for the people of Curaçao. Faced with the ownership of an aging, unprofitable, and large-scale facility and the lack of knowledge of the operation and management of such a facility, the government of Curaçao leased the refinery to the Venezuelan state oil company PDVSA for a low annual rental cost of $14 million and without proper environmental and maintenance regulations. PDVSA refines 320,000 barrels of oil per day on average and their lease agreement expires in 2019, just under 10 years from now. While the Shell-owned refinery was one of the safest in the world during its peak period, it has experienced fires, oil spills and other accidents since it was leased to PDVSA, the world’s fifth largest oil exporter (Currasow, 2007). In 2004 the refinery was completely shut down for 6 weeks after a very large fire which resulted in an $18 million loss, which is more than the annual rent paid to the government of Curaçao. Currently, the refinery has around 1,000 full-time workers and employs another 450 to 500 contract workers. These numbers are far fewer than the 20,000 employees that were working at the refinery in the 1950s and 1960s (LatinFinance, July 2007). In fact, Curaçao took in less than 1% of ISLA’s annual sales of $5 billion in 2007, which is clearly a very small profit considering the damage the refinery has caused to the public for decades (Reuters, June 2009). This shows that the refinery is no longer beneficial to the economy or to the people of Curaçao. Actually, it is quite detrimental since it has become dangerous to the public and environment over time due to poor maintenance and out-of-date energy technology.

Although the refinery was first built for the purpose of refining Venezuela’s new found oil, over the years it has become unprofitable to the refinery and the government of Curacao. The refinery has long since experienced its peak and today it is far from what it was at a local and global level.

Read part 2 of the Isla refinery of Curacao: Highs and Lows.

Photo impressions by Bea Moedt

References:
Caribseek Curacao. 2005. Curaçao History
Curassow. 2007. The ISLA Refinery
LatinFinance. July 2007. Stepping Out
Reuters. June 2009. Curaçao Rules Against PDVSA Refinery Emissions
St. Maarten Private Eye. August 2006. Today – Curaçao Isla Refinery Health Costs 28 Million Florins a Year
Wikipedia. 2010. Curaçao
MCB Bank Annual Report 2006 pp. 18

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