April 09, 2013 [Caribbean Journal] - The United States Virgin Islands and HOVENSA have reached an agreement to govern a 14-month sales process for what was formerly the Caribbean’s largest oil refinery.
The sales process will begin when the USVI Senate ratifies the deal, and will not exceed 14 months, according to the agreement.
HOVENSA will make fuels available to the government and the public through August 2019, or so long as HOVENSA is operating as an oil storage terminal, according to the terms of the agreement.
“I view this as a significant step forward towards our goal of seeing if we can find a new owner who will re-open the refinery thus providing jobs on St Croix and economic stimulus to our entire community,” USVI Governor John de Jongh said in a statement.
“Our negotiations with the refinery’s Owners have been long and difficult, but seeing if we can get the refinery reopened has been important to me and to many in our community.”
Hess Oil Virgin Islands, which jointly owns HOVENSA with PDVSA VI, announced it would close the St Croix-based facility, which was the territory’s largest private employer, at the beginning of 2012.
Under the new deal, HOVENSA announced several other measures: a minimum annual investment of $500,000 in career technical and scholarship programmes for as long as the terminal is owned by HOVENSA, and provision of fuels at its truck rack through March 2014, after which the facility will assist the government in finding third-party suppliers and operators.
The government agreed to suspend HOVENSA’s obligation to bid on the WAPA fuel supply, and that it would reduce HOVENSA’s obligations for payment in lieu of property taxes to $7 million annually.
That will begin in October for so long as HOVENSA operates an oil storage terminal, but not later than September 2019.
After that, the payments will return to $14 million annually.
If the refinery is not sold, or if HOVENSA ceases to operate a storage terminal before August 2019, HOVENSA will make a lump sum payment “as is necessary for the Government to recoup all payments foregone.”
The agreement requires that the sales process be managed by an investment banking firm. HOVENSA’s owners must retain such a firm no later than 10 days after the legislature ratifies the agreement.
