Hess plans won't affect HOVENSA, company says
Published: January 30, 2013
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ST. CROIX - Hess Corporation's announcement Monday that it will be selling its petroleum storage terminal network in the U.S., along with its oil storage terminal in St. Lucia, will not impact the HOVENSA facility on St. Croix's south shore, a Hess spokeswoman said.
The HOVENSA facility "will not be part of the package for divestiture of Hess terminals," Hess spokeswoman Lorrie Hecker said.
HOVENSA is a joint venture between wholly owned subsidiaries of Hess Corporation and Petroleos de Venezuela, S.A.
The subsidiaries, Hess Oil Virgin Islands Corp. and PDVSA V.I., Inc., each own 50 percent of HOVENSA.
HOVENSA announced a year ago that it would cease refining operations and would convert to a petroleum storage facility. It is now operating as a storage facility under an interim agreement with the V.I. government that extends through Feb. 28, while negotiations for permanent revisions to the agreement are ongoing.
The Hess announcement Monday also said that Hess would be completing its exit from the refining business by closing its Port Reading, N.J., refinery by the end of February.
"By closing the Port Reading refinery and selling our terminal network, Hess will complete its transformation from an integrated oil and gas company to one that is predominantly an exploration and production company and be able to redeploy substantial additional capital to fund its future growth opportunities," John Hess, chairman and chief operating officer of Hess Corporation, said in the press release.
It was unclear what effect the Hess Corporation move to get out of the refining business and sell its oil storage terminals might have on its V.I. subsidiary's long-term interest in continuing to be part of a joint venture to operate an oil storage terminal on St. Croix.
A Government House statement on the matter Monday said that Gov. John deJongh Jr. noted the Hess announcement "with great interest."
"We believe this decision is consistent with my Aug. 6 letter to HOVENSA's owners," deJongh said in the statement, noting that he reiterated in his State of the Territory address that "if the owners wish to exit the refinery business, they must agree to a valid process to sell the refinery to a willing buyer, or comply with all of their contractual obligations under the existing Concession Agreement with the Government of the Virgin Islands and all of their environmental obligations under the law."
In the Aug. 6 letter and during a televised speech in August, deJongh called on HOVENSA officials to reopen the refinery or sell it.
Negotiations between the V.I. government and HOVENSA are continuing. The Senate will have to ratify any agreement that is reached.
According to Monday's statement from Hess Corporation, the terminal network it seeks 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. With the closure of the HOVENSA refinery in 2012 as well as Hess' ability to access refined products from third parties to supply these marketing businesses, the terminal system is no longer core to the company's operations," the release said.
The St. Lucia terminal, with 10 million barrels of capacity, is also part of the package for divestiture.
"In addition to the proceeds from the sale of the terminal network, the transaction should also release approximately $1 billion of working capital for redeployment to fund Hess' future growth opportunities," the Hess release said.
The Port Reading refinery, which incurred losses in two of the last three years, is a Fluid Catalytic Cracking unit that primarily manufactures gasoline and components used for blending heating oil, according to the release.
"The financial outlook for the facility is expected to remain challenged due to the requirement for future expenditures to comply with environmental regulations for low sulfur heating oil and the weak forecast for gasoline refining margins," the release said.
Goldman, Sachs & Company will be the financial advisor for the divestiture of the terminal network.
- Contact Joy Blackburn at 714-9145 or email email@example.com.