HOUSTON Oct 28 Venezuela's PDVSA and Hess Corp
have reached a tentative agreement to sell their
350,000-barrel-per-day Hovensa refinery to Atlantic Basin
Refining, the U.S. Virgin Islands' governor said in a statement
The facility on the south shore of Saint Croix has been idle
since 2012. The owners announced negotiations with a potential
buyer in September, after they hired Lazard Ltd in
November 2013 to manage the sale.
A "detailed operating agreement" with the U.S. Virgin Island
requires Atlantic Basin Refining, which was formed specifically
to acquire the shuttered facility, to rebuild and restart it,
employ local personnel and pay the government more than $1.6
billion over the life of the deal.
The operational agreement would be for 22 years, renewable
for two additional 10-year terms.
Additional variable payments will also be required,
depending on the refinery's profitability, Governor John de
Jongh Jr. said in the statement.
Owners of the refinery must take down Hovensa, which has
been used as a terminal in recent years, and clean up the site
if they do not restart the refinery or if they shut it down at
any time in the future.
"This will ensure that, whatever the circumstances, if
there is not to be an operating refinery, we will not be left
with an eyesore and a wasting asset," de Jongh said.
Legislative approval is also required.
The statement said an engineering analysis and a restart
plan are probably take nine to 12 months, while construction and
rehabilitation would take another 24 months and would cost more
than $1 billion.
(Reporting by Marianna Parraga; Editing by Jessica Resnick-Ault
and Lisa Von Ahn)