V.I., HOVENSA negotiating over future of refinery site
Published: November 24, 2012
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ST. CROIX - With the clock ticking and just more than a month to go before an interim agreement is set to expire, the government and HOVENSA are still at the negotiating table.
"There are talks that are still going on between the owners of HOVENSA and the administration right now," Government House spokesman Jean Greaux Jr. said Friday.
Gov. John deJongh Jr. made a speech Aug. 6 rejecting HOVENSA's proposal to operate its shuttered refinery site on St. Croix's south shore as a petroleum storage facility. He instead called on the company to reopen the refinery or sell it.
Government House announced on Oct. 9 that a meeting between government and HOVENSA officials that day had centered on discussion of the governor's counterproposals - and that HOVENSA owners had informed deJongh they would be presenting a written proposal "in the near future."
DeJongh has received that written proposal, Greaux said on Friday.
"It wasn't consistent with what he asked for," Greaux said. "As a result, there are continued talks between both sides."
Greaux characterized the negotiations as "delicate."
For HOVENSA to operate as a petroleum storage facility, it would require major revisions to HOVENSA's 1998 concession agreement with the government, which runs through the end of 2022.
Since it has ceased refining operations, and while negotiations are going on, HOVENSA has been operating under a verbal interim agreement with the government that is set to expire on Dec. 31.
The interim agreement was reached in March, just more than two months after HOVENSA announced that it would be ceasing its refining operations and planned to convert to a petroleum storage facility.
One of the aspects of the interim agreement was for HOVENSA to continue to provide fuel oil to the V.I. Water and Power Authority through Dec. 31. WAPA has now selected a new fuel oil supplier.
HOVENSA also has agreed to keep its truck-loading station, where fuel is sold to gasoline retailers in the territory, open through Dec. 31.
Greaux said Friday that he believes that the possibility of extending the interim agreement may be under discussion - but he said that nothing is set in stone yet.
"I don't think a final decision has been reached as yet," he said.
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.
The governor said during the speech that his counterproposals 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 WAPA.
- 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.
- Contact Joy Blackburn at 714-9145 or email email@example.com.