Home News Local news Atlantic Basin Refining Buys Hovensa

Atlantic Basin Refining Buys Hovensa

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Atlantic Basin Refining Buys Hovensa

The V.I. government has negotiated an operating agreement with Atlantic Basin Refining Inc., a company formed specifically to buy the shuttered Hovensa refinery, according to a statement released Monday night from Government House.

Gov. John deJongh Jr. met on Monday with members of the V.I. Legislature, who must approve the new operating agreement, to discuss the development.

In September, Government House announced the tentative sale of the refinery, which closed in 2012, costing the V.I. economy more than 2,500 jobs. The governor said then that the next step was the "delicate negotiations" with the unnamed buyer and the government over the operating agreement.

DeJongh said Monday that the government negotiated an operating agreement requiring ABR to rebuild and restart the refinery, to employ hundreds of Virgin Islanders and to make substantial payments to the government totaling more than $1.6 billion in fixed payments over the life of the agreement and additional variable payments depending on the refinery’s profitability.

Moreover, and for the first time ever, owners of the refinery will be required to take the facility down and clean up the site if they do not restart the refinery or if it is again shut down at any time in the future, the Government House announcement said.

The operating agreement also requires the new owners to pay into a site restoration fund that will pay for the ultimate deconstruction and takedown of the refinery and remediation of the site.

“This will ensure that, whatever the circumstances, if there is not to be an operating refinery, we will not be left with an eyesore and a wasting asset,” deJongh said.

Atlantic Basin Refining is headed by a group of individuals with experience in refining, energy finance, oil trading and environmental restoration, Government House said.

DeJongh said economic activity at the refinery would pick up as soon as the Legislature approves the operating agreement and the sale of the refinery is closed.

“Activity will accelerate substantially once construction commences. After the restart, the refinery is expected to employ over 700 workers, with over 500 fulltime employees and over 200 contractors," the governor said. Once restarted, the refinery will provide a tremendous boost to the St. Croix economy and generate hundreds of additional jobs to support the refinery’s operations and employees."

The base term of the operating agreement is for 22 years, but it may be extended for two additional terms of 10 years each if ABR is not in breach of its obligations under the agreement.

DeJongh described the negotiations as long and tough.

“Our efforts have been driven by my strong belief that restarting the refinery was the quickest and best way to generate jobs and economic recovery on St. Croix," the governor said.

"It’s been a long process, but I believe there is finally light at the end of the proverbial tunnel that has the potential to bring some long-awaited and much-needed economic activity to the island of St. Croix.”

17 COMMENTS

  1. Wow! you must read between the lines….”Moreover, and for the first time ever, owners of the refinery will be required to take the facility down and clean up the site if they do not restart the refinery or if it is again shut down at any time in the future, the Government House announcement said.”

    A company is formed to buy the refinery, if they do not
    start the refinery they will declare bankruptcy. This is a shell company with no assets except the ones they want to buy. This is a great maneuver by Hess to pass the liability of the shuttered refinery to a company that does not have the ability to clean it up. Ultimately passing the responsibility to the Govt of the VI and her people. Mark these words!

  2. Wow! you must read between the lines….”Moreover, and for the first time ever, owners of the refinery will be required to take the facility down and clean up the site if they do not restart the refinery or if it is again shut down at any time in the future, the Government House announcement said.”

    A company is formed to buy the refinery, if they do not
    start the refinery they will declare bankruptcy. This is a shell company with no assets except the ones they want to buy. This is a great maneuver by Hess to pass the liability of the shuttered refinery to a company that does not have the ability to clean it up. Ultimately passing the responsibility to the Govt of the VI and her people. Mark these words!

  3. This is news that make you laugh and cry,this refinery I can say is comparable to the use of drugs, you know its bad for you and is killing you,but you need it in your veins to sustain and stay alive..what a bad situation.
    I feel like jumping up and down on for the fact that couple hundred people can get back a job.its also category 1 b.s that when the refinery opens the majority of the jobs will go to foreigners sent to the island to work.
    I so sense a small scale operating facility from all this. And I’m feeling like this is a very shaky and shady deal ,de joghn finds a way to bring companies and make sure he has a stake In them before they open,this character is money hungry.

  4. Don’t get too excited here ladies and gentlemen.

    This is how it’s going to go down.

    1. “Atlantic Basin Refining” (wink wink) will close on the purchase of the HOVENSA refinery.
    2. Government/Senate gets substantial payments over the life of the agreement. Life could be 22 years, 22 months, 22 days. Can you say “bribe”?
    3. HOVENSA (HESS) is off the hook for any and all remidiation. Nice going guys. Hats off to you for pulling that one off.
    4. Atlantic Basin Refining says “boo hoo, we can’t make this work. We’re filing for bankruptcy. It’s been nice guys, see ya later.”
    5. So who wins? Government, Senators, Hess
    6. So who looses? The people of the USVI.

    Atlantic Basin Refining is nothing more than a shell that will allow Hess to bow out of its obligations by throwing a little cash at the government. Be patient. Time will tell.

  5. @Marcus,@lvsolja, @cepleftstx, congratualtions! You’ve figured the scheme out. Now tell us and the owners of the empty stores in C’Sted and F’sted, and the landlords with no one to rent to, and the businesses ready to close and probably most importantly, those “few hundred” people who don’t currently have jobs, what’s your solution? What’s your plan? What’s the right answer here other to continue to bitch and moan?

  6. It is the right of the residents to voice their opinions. It is the job of the elected officials to fix this mess. That is their job. That is why they got elected in the first place.

    Yes, it is also the duty of the residents to help. The government also has to be proactive and call in town hall meetings and whatnot and listen to the community they represent.

    That being said, it is too early to tell whether it is a bad deal or a good one. I will seat back and wait to hear more. Looking at it right now, as is, it doesn’t look that solid.

  7. Do your research. The only name attached to this thus far is Attorney Mark W. Eckerd of St. Croix, and he is part of the “company,” not a legal representative from what I can see (Reuters, Bloomberg). FCI is a consulting firm, brokerage and may have helped put some capital together. Now, one of the theories of falling gas prices (now below $2.50/gal. retail in some places Stateside, while HOVENSA holds tight at over a dollar higher on the wholesale prices to the V.I.), is a plan by OPEC to halt Bakken and other tar sands crude production. It’s pricey stuff, tar sands and shale oil, but at high worldwide per barrel rates upwards of $140/bbl., the economics worked. Much lower, and Bakken, Athabascan and other sources become inefficient, tens of thousands of U.S. jobs lost, etc. That may be the OPEC plan – to defeat these alternative sources of oil.
    SO, is HOVENSA economically viable one way or the other? It wasn’t for Hess, so what’s really going on here? WTF is “Atlantic Basin Refiners” and where is their State of incorporation? Are they a Delaware based shell, the brainchild of a Cruzian? Sorry, I don’t trust anyone in the V.I. Government when there are billions of dollars involved. Someone, I’m sure, is sitting there wringing their hands wondering how they can get a finger in the till and get out before it all collapses. Who?

  8. It’s indeed a sad commentary on our lack of faith and trust in our government and elected officials when we must view everything with distrust and skepticism. Unfortunately, they deserve our distrust because they they continue to push these pie in the sky deals brought to them by persons/entities that have no proven track records and shady, if not criminal pasts, while willing to throw millions of dollars at them and get the VI even more in debt.

    I will take a wait and see attitude to this latest development.

    Wonder into whose pockets our money will be flowing this time around.

  9. if pessimism is the enemy, the Virgin Islands will surely lose the war. i have never seen so many negative people in one place. it’s really awful. why don’t you all go do something for someone else instead of creeping around making life miserable for the rest of us.
    this group that is looking to restart St. Croix’s refinery has done this before and is sincere about trying to help us and themselves. let’s see if you can drive them away, too. God awful, negative “againsters.”
    yuck.

  10. VI Watchdog
    This is DeJongh’s last scam before leaving office. A total of 700 jobs. Hovensa currently has 600 people working there. This means that the fake sale only promises 100 net jobs.
    Think people. They plan to spend a billion dollars. Do they even have 10 million in assets? This is a scam. I almost bought it for a minute. My joy lasted 5 minutes until I got to the end of the article.

  11. mlawrence, did not confuse predictions with bitching and moaning. You are the one bitching. I have no solutions.
    We are #@&*ed that is all.

  12. Annie Murphy, believe the hype all you want. I do wish I am wrong. Hovensa is a 1 billion dollar liability for Hess
    and they just figured a way out. It about business not the people of St. Croix. Hovensa was a major contributor to the deJongh re-election and now the Governor has to pay them back.

  13. Hey mlawrence,

    I do realize the island’s frustration with the situation. The resentments are hard to erase. Trust me, I know. I gave 20 years of my professional career to the current owners. I was a member of the HOVENSA fire brigade, willing to go in harm’s way to protect personnel and company property. Did this matter when the refinery closed? No, it didn’t. I like all the other former refinery employees was dropped in the grease when the refinery closed. I got a handshake from the refinery manager and was told “good job”.

    I don’t have a plan but I don’t think releasing the current owners from their refinery/environmental remediation obligations is the answer. Do you? I don’t think lining the pockets of the senators and govenor with payoff money is the answer. Do you?

    For the sake of the island, I hope I’m wrong with how I see it. I would be tickled pink if I was. However, I lived on STX and worked for HOVENSA long enough to know that there is plenty to read between the lines. Transparency is not one of the strong points of the current refinery owners or the VI government.

  14. The St. Croix economy needs a boost. I agree with that BUT I am not willing to confuse gratitude with accountability. The new owners should be held to the highest expectations regarding our environment. Who are the key people at Atlantic Basin Refining….why is this a secret?? $1.6 Billion over 22 years or around $73 Million a year in fixed payments to the government + $70 Million a year over 10 years to satisfy the EPA mandates + Engineering Studies + Old Fuel Availability Problems (burning oil as opposed to cheaper natural gases) + + +. Are the margins that favorable? I smell a dead mouse behind the furniture, somewhere!

  15. Warning…When I worked there, they tried to get us to fib at times concerning leak calculatings to limit recordable incidents. For example, a leak of 10 lbs of benzene or above would constitute a recordable. Locals defended the true numbers but many non-locals didn’t question the manipulation of figures. Why? Most of the managers were non-locals also. The only way to make sure that our island is respected is to ensure that the majority of management is local. Locals love their home.

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