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Guangdong Zhenrong taps refiner

China’s debt-ridden Guangdong Zhenrong Energy (GZE) has asked a private refining group to join a multibillion dollar investment in an aging Caribbean oil plant to shore up financing on the deal, said two Chinese executives involved in the matter.

The Curacao government last week scrapped a preliminary deal with Guangdong Zhenrong to operate the century-old Isla refinery, saying the commodity trader lacked the financial muscle for the job on its own.

Taking over the 335,000 barrels-perday (bpd) refinery, operated for decades by Venezuela’s cash-strapped state oil company PDVSA, would give China a foothold in the Caribbean’s second-largest refinery, which has also been a key transfer point for Venezuelan oil heading to Asia.

Chen Bingyan, Guangdong Zhenrong’s chief negotiator for the project, acknowledged that the Chinese commodity trader has heavy debt after a rapid expansion but said that should not stop it from pressing ahead on the investment.

Baota Petrochemical Group, a privately run refining and petrochemical group in northern China, has emerged as the new partner in the Curacao project, which requires $3.4 billion to revamp the aging oil plant.

Chen said Asia Development & Investment Bank’s offer of financial support will be valid until January 2019, and its release of loans will be subject to the involved parties signing a final commercial contract and obtaining regulatory approvals.