The owners of the closed Hovensa refinery on St. Croix have extended the interim agreement that outlines the company’s obligations to the U.S. Virgin Islands while it continues exploring the sale of the refinery and oil storage facility as part of a larger plan to focus on oil exploration.
The announcement was made Tuesday night by Gov. John deJongh Jr. after a meeting with members of the 30th Legislature, Lt. Gov. Gregory Francis and V.I. Delegate to Congress Donna Christensen to update them on the status of negotiations.
Hess Oil Corp. announced Jan. 28 that it plans to sell its terminal network in the United States and close its refinery in Port Reading, N.J., as part of an effort to get out of the oil refining business and concentrate on exploration and production. That announcement prompted deJongh to remind the company it still has obligations to the U.S. Virgin Islands.
The governor reported on Tuesday night that the government and the owners of Hovensa have been making progress in negotiations, but additional time is needed to complete them.
“I explained that the owners of Hovensa have come to the point where they have now agreed to a sales process," the governor said. "This is something we have pushed for from the beginning."
"As such, I have agreed to a further extension of the current interim agreement as requested by the refinery’s owners. The current interim agreement is set to expire at the end of this month. An extension is required in order to finalize the details of the sales process, its timing and what possible adjustments to Hovensa’s current obligations seem reasonable while this process is going forward,” de Jongh said.
DeJongh cautioned that the extent of the details of any sales process are yet to be finalized and urged everyone to remain realistic that the interim operation of an oil storage terminal facility is not a business on the scale of a refinery “which is what we hope will again be possible.”
Senate President Shawn-Michael Malone said he supports an extension of the concession agreement in order to facilitate the negotiation process.
"In order to protect the interests of the people of this territory it is critical that we maintain a unified front on this issue – I would like to thank every member of the 30th Legislature for participating and providing meaningful input," Malone said.
Hess announced the closure of the refinery in January 2012. Since August, the governor has called on the owners of Hovensa to either reopen the refinery or join with the government in establishing a sales process that will lead to a new owner resuming refinery operations thus providing much needed jobs on St. Croix.
DeJongh also said the company has assured him there will be no interruption of the fuel supply on St. Croix and that both sides will work to complete, without delay, negotiations towards an agreement for review and consideration by the 30th Legislature.
The meeting was held at Government House, St. Thomas. Lawmakers in attendance included Malone, Sens. Janette Millin Young, Donald Cole, Clifford Graham, Nereida Rivera O’Reilly, Judi Buckley, Terrence Nelson, Craig Barshinger, Clarence Payne, Myron Jackson, Diane Capehart, Tregenza Roach and Kenneth Gittens. Delegate Christensen, Senate Vice President Sammuel Sanes and Sen. Alicia “Chucky” Hansen participated via teleconference.
David Herr, managing director of Duff & Phelps, consultants to the government on Hovensa, also attended, along with Attorney General Vincent Frazer; Planning and Natural Resources Commissioner Alicia Barnes and members of Government House senior staff.
In Hess’ Jan. 28 announcement, the company said the terminal network it plans to sell "is located along the U.S. East Coast and has a total of 28 million barrels of storage capacity in 19 terminals, 12 of which have deep water access. The terminals previously served as the primary outlet for Hess’ share of production from its Hovensa joint venture refinery, most of which was used to supply Hess’ retail and energy marketing businesses."
It added that the company’s St. Lucia oil storage terminal, with 10 million barrels of capacity, will also be included in the package.
