Legislative vote delays St. Croix refinery sale

The Senate of the 30th Legislature of the US Virgin Islands has voted unanimously to send back a proposed agreement that would provide for the restart of Hovensa LLC’s idled 500,000-b/d refinery on the island of St. Croix to the legislative body’s finance committee for further review (OGJ Online, Oct. 29, 2014).

The Nov. 13 vote occurred during a senatorial special session called by Gov. John P. de Jongh Jr. for members to consider ratification of an operating agreement negotiated between government officials and principals of Atlantic Basin Refining Inc., which plans to renovate and recommission the shuttered refinery, according to a release from de Jongh’s office.

The legislative delay in approving the proposed agreement, in effect, stalls what now has become a limited window of opportunity to save the refining complex, according to de Jongh.

The governor’s concern follows an announcement earlier in the week from the Hess Corp.-Petroleos de Venezuela SA joint venture Hovensa that it will not invest any additional funding into the St. Croix complex past mid-December, at which time it will begin the process of shutting down all operations at the site.

Should Hovensa proceed with a full shutdown of the complex, which currently acts as an oil storage terminal, there would be neither a sale of the refinery to any interested buyer nor any possibility of even restarting operations at the plant, according to a letter from Hovensa’s legal counsel to both de Jongh and senate members.

“While I accept the Senate’s stated need for further consideration of this most important matter, I trust that they and the community understand how critical the time factor is, especially now that we have been more fully informed of Hovensa’s timetable,” the governor said.

No timetable was disclosed as to how long senators would take to make a decision regarding the operating agreement, but with only about 2 months left before the start of a new legislative session, de Jongh urged members of the current Legislature to give priority to acting on the matter.

“This agreement was consistent with my long-held belief that the best use of the facility was as an oil refinery and that, once a buyer was identified and agreements negotiated, we could look to the day for the refinery to be operational and once again provide employment for hundreds of Virgin Islands residents,” the governor said.

In addition to the operating agreement with the USVI government, ABR also has a separate agreement in principle with Hovensa for the purchase of the refinery as well as all related contracts and assets, according to the company’s newly launched web site.

Should the sale proceed, ABR plans to reconfigure the refinery into one that processes US light, sweet crude, which would resolve many of the challenges faced by the complex’s former owners, who were obligated to process heavy, sour Venezuelan crude supplies.

Compared with its former operations, the reconfigured St. Croix refinery, which is to have an initial crude processing capacity of 300,000 b/d, will experience greater operating flexibility, higher clean-fuel yields, reduced power demand, and lower emissions.