Lago Oil and Transport Company
Lago Oil & Transport Co. Ltd. had its beginning in 1924 as a shipping company carrying crude oil from Lake Maracaibo to its transshipment facility on the island of Aruba.
History
With the discovery of vast amount of crude oil under Lake Maracaibo, but unable to send it to market because the channel into Lake Maracaibo was too shallow to allow oceangoing oil tankers to enter the lake, Pan American Petroleum and Transport Company, who held the lease on a large area of Lake Maracaibo, incorporated Lago Oil & Tr Lake tankers to bring the crude oil from Lake Maracaibo to Aruba, where it was stored ashore in large tanks; and then later loaded onto larger oceangoing tankers and taken to the United States for refining into finished petroleum products such as gasoline, diesel fuel, Bunker C and heating oil.
Refinery
In 1928 Standard Oil of Indiana purchased the Lago transshipment Pan American Petroleum facility in Aruba, as well as the oil holdings under Lake Maracaibo in Venezuela. Standard Oil of Indiana then began to build a small refinery next to the transshipping facility port. Soon after the small refinery was completed a tax was anticipated to be imposed on imported crude by the U S Government. Standard of Indiana had only marketing outlets in the United States and knew they could not compete with imported oil that was taxed, so they sold all their holdings to Standard Oil of New Jersey, who had marketing outlets around the world. Standard Oil of New Jersey purchase Standard of Indiana's holding, not for the small refinery in Aruba, but for the vast holding in crude oil Standard of Indiana owned under Lake Maracaibo.
Then in 1938 Standard Oil of New Jersey obtained a contract to supply Britain with 100 octane Aviation Gasoline. However, because of the isolationism that was prevalent in the United States, the contract states that the Aviation gasoline had to be produced outside the United States. Thus the Lago refinery becomes an important asset by providing the place outside the United States where the Aviation gasoline would be produced. The size of the Lago refinery expanded to produce Aviation gasoline for the British Government long before the United States entered World War II.
Wartime
With the United States entry into World War II in 1942 the demand for Aviation gasoline further increased and considerable expansion was done at the Lago Refinery soon after the United States entered the war. With this expansion, Lago became one of the largest refineries in the world, only bested by Royal Dutch Shell refinery on Dutch-owned Curaçao, and a major producer of petroleum products for the Allied war efforts.
The importance of the Lago refinery was well known to the German High Command and on February 16, 1942 the Lago refinery was attacked by the German Submarine U-156. The submarine's deck gun exploded due to mistakes by the German deck gunner, and the refinery was not damaged. However, three of the lake tankers that carried the crude oil from Lake Maracaibo were torpedoed.
Postwar
When demand for gasoline was high after World War II the Lago Refinery was running at full capacity and employed over 10,000 personnel. About a thousand were foreign staff employees in supervisory positions and the remainder of the work force was from the native population of Aruba as well as “off-islanders” imported from mainly the British West Indies. These employees lived in San Nicolaas and in the interior of the island, the foreign staff employees lived in a “Company Town” known as Lago Colony which was east of the refinery.
In 1985 Exxon Corporation closed the Lago Refinery and began to dismantle the facility as well as the Colony. Before the refinery was completely dismantled it was taken over by the Aruba Government and sold to Coastal Petroleum, which re-opened the refinery after major overhaul but not nearly it its original capacity. Coastal later sold the refinery to Valero Energy Corporation which now operates the refinery.