Atlantic Basin Refining (ABR) officially confirmed that it has reached an agreement in principle to purchase Hovensa, inclusive of the St. Croix refinery and all related contracts and assets, from affiliates of Hess Corporation and Venezuela's state-run PDVSA.
ABR this afternoon will meet with the 30th Legislature of the United States Virgin Islands (USVI) to discuss an agreement with the Government of the USVI regarding the terms and conditions of Hovensa, LLC’s operation of the St. Croix refinery.
ABR was formed by energy industry executives for the specific purpose of acquiring Hovensa, which under ABR’s ownership will reconfigure the St. Croix refinery to process light sweet crude. The St. Croix refinery formerly operated as the largest oil refinery in the western hemisphere, processing heavy sour Venezuelan crude before it announced its closure in January 2012. ABR’s partners assisting with the reconfiguration of the St. Croix refinery include Samsung Engineering, Wyatt Field Service Co., and Sun Contractors VI, an affiliate of SunExcel, as well as other world-class engineering, energy, petrochemical, financial and business advisory firms.
Speaking from St. Croix, ABR Managing Director for Legal and Governmental Affairs Mark W. Eckard said, "The U.S. shale revolution has created an abundant supply of U.S. light sweet crude, and there is currently a limited ability to process this type of feedstock at U.S. refineries. Reconfiguring the refinery on St. Croix as a strong merchant refiner will allow ABR to maximize this opportunity and bring significant tax revenues, training and jobs to the U.S. Virgin Islands.
"Together with our partners, we are confident that ABR has the requisite expertise and financial capabilities to make this project a success for the benefit of our future employees, customers, neighbors and investors."
Strategic Advantages
A reconfigured refinery, 30 million barrels of storage, a strategic geographic location with a deep water port and Hovensa’s experienced management and local labor force will allow ABR to compete successfully in today’s marketplace. The St. Croix refinery will be positioned to provide refined products to consumers in the Caribbean, U.S. East Coast, South America and other markets.
Benefits of a Restored Refinery
The St. Croix refinery will support at least 500 full-time positions and hundreds of subcontracted employees. In addition to current Hovensa staff, ABR is interested in recruiting former Hovensa employees from within the Virgin Islands and returning former Hovensa employees who left St. Croix for work elsewhere.
ABR expects the USVI to ultimately gain more than $100 million in annual tax revenues from refining operations after the restart.
Future Operations
The St. Croix refinery is a world-class refinery and terminal facility. After reconfiguration and restart, operation as a merchant refinery will restore its economic viability and establish it as the standard for safety and environmental compliance. Under ABR’s ownership, Hovensa will install advanced refining technology that will enable it to reduce emissions. Initially, the St. Croix refinery will be configured to process 300,000 barrels of crude oil per day.
Timeline and Next Steps
Following today’s hearing before the 30th Legislature of the Virgin Islands, the Legislature will meet again on Wednesday in a Special Session called by the Governor of the Virgin Islands to vote on ratification of ABR’s operating agreement with the Government of the Virgin Islands. Ratification of the operating agreement is a necessary step toward completion of ABR’s transaction with Hess and PDVSA. After all closing conditions have been met, ABR’s engineering firms will commence a comprehensive engineering, procurement and construction (EPC) evaluation of the St. Croix refinery.