UPDATE 1-Hovensa completes Virgin Islands refinery shutdown

Tue Feb 21, 2012 4:26pm EST

NEW YORK, Feb 21 (Reuters) - Hovensa LLC completed
shutdown of its 350,000 barrel-per-day St. Croix, U.S. Virgin
Islands refinery on Tuesday, the company said in a statement.	
    The complex will be operated as an oil storage terminal.	
    "Hovensa's operation of the complex as an oil storage
terminal is subject to the completion of negotiations with the
Government of the Virgin Islands," the company said.	
    Losses at the Hovensa refinery, owned by Hess and
Venezuelan state oil company Petroleos de Venezuela,
totaled $1.3 billion over the past three years and were
projected to continue.	
    The company had announced the refinery shutdown on Jan 18.
 	
    On Tuesday, when Hovensa said the shutdown was complete, the
markets focused on geopolitical tensions in the Middle East, the
Euro and the strength of the S&P 500. [O/R}	
    March RBOB futures ended the day up 1.81 percent at $3.066
per gallon and the cash market in the New York Harbor saw values
of either side of 4.00 cents per gallon under the screen. 	
    The 46-year-old refinery was once one of the largest plants
in the Americas, with 500,000 bpd capacity. The company idled
150,000 bpd of older, less efficient units in 2011 on the West
Side of the plant.	
    Sluggish oil demand growth in the United States and Europe,
growing competition from new, advanced Asian refineries and
spike in the price of Atlantic Basin Brent-based crude oil
relative to inland U.S. grades has devastated refining margins
for many older East Coast and European refiners.	
    The U.S. East Coast is now facing a tight summer gasoline
supply outlook. In September, ConocoPhillips and Sunoco
Inc. announced they would close three refineries with
nearly 700,000 bpd of capacity in the region, two plants have
already been idled, and Sunoco's 335,000 bpd Philadelphia
refinery is slated for closure if no buyer is found.
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