DeJongh, HOVENSA owners discuss refinery's future

Gov. John deJongh Jr. sat down with HOVENSA owners on Tuesday to discuss his counterproposals to the company's planned conversion of the refinery site on St. Croix's south shore to an oil storage terminal.

According to a statement Government House released, the meeting occurred at Government House on St. Thomas.

It came more than two months after deJongh made a speech Aug. 6 rejecting HOVENSA's proposal to operate as a petroleum storage facility and calling on the company to reopen the refinery or sell it.

The release contained few details about the meeting or the specifics of the discussion.

"The parties had an opportunity to fully discuss deJongh's August 6th counter-proposal and the current status of negotiations," it said. "The owners of HOVENSA have informed the governor that they will be presenting a written proposal in the near future."

The governor's Aug. 6 speech was followed by more than a month of silence from HOVENSA.

On Sept. 20, the governor told senators that HOVENSA officials had requested a meeting - the meeting that ultimately happened on Tuesday.

According to Tuesday's press release, those who attended the meeting with the governor included Lt. Gov. Gregory Francis, Attorney General Vincent Frazer, Government House Deputy Chief of Staff Nathan Simmonds, Peter Hiebert of the government's Washington, D.C., law firm Winston and Strawn, financial adviser David Paul of Fiscal Strategies and David Herr of Duff and Phelps, the government's consultant on HOVENSA.

The HOVENSA team included its owners and counsel, according to Government House.

HOVENSA spokesman Alex Moorhead declined to provide information about the meeting outside of the information that was in the Government House release.

In his televised speech Aug. 6, deJongh said that the HOVENSA proposal to operate as a petroleum storage facility under a proposed modification to the current agreement between the company and the government offered little benefit to the territory and gave strong advantages to HOVENSA.

Those advantages, he said, included a major reduction in HOVENSA's property tax payments and a "lengthy extension" of its submerged lands permit at a rent of only $1 per year.

The governor also contended in his speech that operating the storage facility would allow HOVENSA to "maintain the fiction" that it might reopen the refinery and thereby avoid triggering expensive closure obligations in federal environmental protection laws.

DeJongh also asserted that the storage facility would provide HOVENSA with a "free option" to hold the refinery until sale conditions and prices improve - and that a modification to the agreement as HOVENSA had proposed would allow it to tout to potential buyers benefits that could enhance the price of the refinery at the territory's expense.

The governor said during the speech that the counter-proposals he offered were:

- For Hess and Petróleos de Venezuela S.A., the two companies that formed HOVENSA, to make plans with the territory to reopen a more efficient refinery, jointly working to get the benefits of a lower-cost fuel supply for the refinery that can also provide a cheaper fuel supply for the V.I. Water and Power Authority.

- If the owners do not agree, the governor asked for HOVENSA to work with the territory to find new owners who would work with the territory to reopen a more efficient refinery, providing jobs and revenue and using a fuel that would also provide a cheaper fuel supply for WAPA.

If HOVENSA rejects both counteroffers, deJongh said in the speech that he expects the company to "fully and completely comply with all of the requirements" of the contract that is in place, and indicated he is willing to sue to enforce the terms of the contract.

He noted that there is a possibility that HOVENSA could try to avoid its obligations under the contract entirely by filing for bankruptcy.

- Contact Joy Blackburn at 714-9145 or email jblackburn@dailynews.vi.

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