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U.S. refiner and bunker supplier Valero Energy Corporation has informed plant workers this week that it intends to halt production at its bunker-producing refinery in Aruba indefinitely.

The San-Antonio-based refinery announced in June that it was shutting down the 255,000 barrels-per-day (bpd) facility in July for two to three months due to poor refining margins.

"Margins aren't great and sour crude discounts are very small, so that refinery is not profitable right now," spokesman Bill Day said in June.

Valero had hoped that a halt in production would enable it to reduce expenses until the oil industry improved. However, with margins still not improving over the past month, this prompted the company's management to make the decision to close the refinery indefinitely.

The company is said to be currently looking at alternatives to keep the refinery open long-term, including a possible sale of the facility. However, much of the decision-making will depend on future economic conditions, Day said.

Valero purchased the Aruba refinery in 2004 for $465 million. It began seeking a buyer for the facility towards the end of 2007 and was reported to have negotiated a deal with Brazil's Petrobras for approximately US$2.8 billion before a fire took place on January 25th 2008 in a vaccuum distillation unit.

Other buyers said to be interested in purchasing the refinery earlier this year were PetroChina and Colombia's Ecopetrol. However, the facility's inability to make finished products has considered to be one of the main reasons Valero has not been able to sell the refinery so far.