HOVENSA, V.I. government continue to butt heads
Published: August 15, 2013
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ST. CROIX - The standoff between the V.I. government and HOVENSA continued on Wednesday, as the clock on an interim agreement ticked down and the prospect of litigation looms.
Government House issued a statement Wednesday afternoon saying the governor had requested updates from Cabinet members on the status of resources and facilities available for fuel on St. Croix, an update considered "now pressing" because of HOVENSA's plan to shut down the fuel rack where St. Croix gets its gasoline once current supplies are finished.
"I want to ensure that there is no disruption to the supply of gasoline and diesel fuel for motor vehicles and for marine uses, as well as no disruption to the supply of propane for cooking as well as commercial or industrial uses, given the announcement by HOVENSA that it will stop supplying the island when present fuel supplies are exhausted," deJongh said in the release.
HOVENSA spokesman Alex Moorhead would not say Wednesday afternoon how much fuel for the racks HOVENSA has in storage.
He said HOVENSA considers the amount of fuel it keeps for that purpose proprietary information, which it will not provide to the public.
Department of Licensing and Consumer Affairs Commissioner Wayne Biggs Jr. told The Daily News on Wednesday that the HOVENSA fuel rack is currently the preferred method for St. Croix gas station operators - and some St. Thomas ones - to get fuel.
However, if that becomes unavailable, Biggs said St. Croix would be able to move gas on-island through a method he called "roll-on, roll-off," where trucks or trailers carrying fuel are loaded onto a barge - "rolled on" - shipped to the island, and then unloaded or "rolled off."
"There's already facilities in place on St. Croix that will allow for roll-on, roll-off," Biggs said. The loading can be done at the Container Port and at Gallows Bay, he said.
The issues, according to Biggs, would involve developing adequate fuel storage capabilities, as well as working out the logistics for importing adequate fuel to meet the island's demands.
"Definitely, there's going to be some logistics involved," he said. "Also, we have very limited storage on St. Croix. That's an issue."
DLCA currently is reviewing the storage capacity of each service station on the island, according to Biggs.
"I will say that there are many other islands that do not have a refinery and they get their fuel," he said, but he also said he hopes things are settled with HOVENSA soon.
"I'm hoping we can get this resolved sooner rather than later. All of us depend heavily on gasoline," he said. "Hopefully, we'll get it resolved amicably so there's not a long, drawn-out court battle."
In a letter dated Monday, attorney George Dudley outlined how his clients - HOVENSA, Hess Oil Virgin Islands Corp. and PDVSA - intend to proceed since the 30th Legislature on Aug. 7 rejected a proposed amendment to the company's agreement with the V.I. government.
That letter - and a previous one, dated Friday, from deJongh to HOVENSA and its owners officially notifying them of the Legislature's decision and outlining the government's position on HOVENSA's obligations - highlight how far apart the entities are.
The government contends the company is required, for example, to operate a refinery and to make sure there are adequate fuel supplies in storage to meet the territory's needs. The government also asserts that a stand-alone oil storage terminal operating free from import duties is not permitted by the existing agreement.
However, HOVENSA contends it has no obligation in the existing agreement to operate a refinery, and absent an operating refinery, it also has no obligation to maintain adequate fuel supplies for local consumption.
"As I have explained to you previously, the demand for products consumed in the territory is not sufficient to support the expense of operating the storage terminal and fuel rack without the additional storage business," Dudley wrote in the letter. "Consequently, when the inventories presently in storage at the refinery are exhausted, they will not be replaced and the storage facilities and fuel rack will be shut down."
An interim agreement - which the parties operated under after HOVENSA shuttered its refinery on the South Shore in early 2012 and while they were negotiating the proposal that the Legislature rejected last week - is set to expire today, with a reversion to the existing agreement Friday.
DeJongh has said he intends to enforce that agreement.
Government House spokesman Jean Greaux Jr. said Wednesday that the governor had not at that point talked to officials from HOVENSA, and that deJongh is mulling the options.
"Obviously, litigation is not the only recourse in his eyes," Greaux said Wednesday night. "No final determination has been made as to what the course of action will be."
Greaux said the governor had not formally received any suggestions from senators about what changes they want to see in the agreement.
"He, too, heard many of the statements on the floor last week about what the senators would have liked to have seen, what they wanted," Greaux said. "But he has not formally received any recommendations from the Legislature; he has not received any plans from the senators as to suggested next steps."
- Contact Joy Blackburn at 714-9145 or email firstname.lastname@example.org.