Processing Magazine

Nicaragua Buys Esso Standard Oil Tanks

January 11, 2008
The Associated Press reported recently that Nicaragua has bought a disputed fuel tank facility from an Exxon Mobil subsidiary to store subsidized Venezuelan oil, according to President Daniel Ortega who did not disclose the terms of the sale.

The Puerto Corinto facility, previously owned by Esso Standard, a subsidiary of Irving, Texas-based Exxon Mobil Corp., will be used to store 600,000 barrels of oil a month, sent at a discount by Ortega''s leftist ally President Hugo Chavez.

Esso Standard will continue operating Nicaragua''s only refinery.

Ortega''s government failed to reach a deal with the company on the use of the tanks last year, placing a lien on Esso''s assets and claiming it owed back taxes.

The two sides reached a temporary oil storage agreement in September, and the lien was lifted. Esso has since agreed to pay back taxes and the government has removed its fines, said Bayardo Arce, a financial adviser to Ortega.

Joaquin Magalhaes, general manager of Esso Standard, confirmed the sale of the tanks and said the company had not violated any laws.

Ortega imposed state controls on Nicaragua''s economy during his first turn as president in the 1980s, when he battled U.S.-backed Contra rebels.

Since his return to office last year, he has promised to protect private property and foreign investment, even while cozying up to the socialist Chavez. He last month hinted he was considering nationalizing the country''s oil industry.