April 1, 2013 / 11:01 PM / 5 years ago

HOVENSA refinery sale process agreed to 'in principle'-Gov.

NEW YORK, April 1 (Reuters) - The U.S. Virgin Islands and the owners of the St. Croix refinery have agreed “in principle” to a sale process for the shuttered plant, the governor of the U.S. territory said on his website.

The interim agreement between Governor John De Jongh Jr. and HOVENSA, the joint venture between Hess Corp and Venezuela’s PDVSA, could pave the way for a revival of the refinery if a buyer for the troubled plant can be found.

De Jongh has been pushing HOVENSA to reopen the refinery or sell it since last August, in the hope of restoring jobs on the islands. An update on the talks was posted on the governor’s website over the weekend.

“The finalized agreement will set forth the process for the sale of the refinery on St Croix,” the post on the governor’s website said. “When signed by all parties, the agreement will be presented to the Legislature for its consideration and approval.”

Once one of the largest refineries in the Americas, HOVENSA turned the plant into a storage terminal last year after attempts to boost profitability failed.

Powered by oil rather than cheap natural gas like most U.S. plants, HOVENSA had lost $1.3 billion in recent years despite efforts to trim capacity and improve efficiency, including cutting output to 350,000 barrels-per-day (bpd) from 500,000 bpd.

A spokesperson for HOVENSA declined to comment on the Governor’s statement.

The finalized agreement for the sale process is expected to be presented to the government within the next ten days, according to a spokesman for the governor.

A new owner could decide to revive the plant’s refinery operations but would have to re-negotiate air and water permits and other contractual terms, the spokesman said.

HOVENSA owns and operates the St. Croix refinery under a 1998 concession agreement with the Virgin Islands government that runs through the end of 2022.

The refinery’s oil storage operations will continue thoroughout the sales process, the governor’s spokesman said.

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