AG Walker Subpoenas PDVSA Over HOVENSA Closing
Attorney General Claude Walker
CHRISTIANSTED – The V.I. Attorney General has sued Hess Corporation for “illegal desertion” of the HOVENSA oil refinery and issued a subpoena to its partner, Venezuela´s state-owned Petróleos de Venezuela, South America (PDVSA), to explain its alleged role.
The 350,000-barrels per day HOVENSA refinery was mothballed in January 2012 and the facility, located on St Croix’s south shore, was converted into a storage terminal.
Hess has been accused by the V.I. government of violating the law by abandoning the refinery a decade before it fulfilled its obligation to operate it.
Hess owns a 50% stake in HOVENSA. The other 50% is owned by PDVSA, which supplied heavy crude to the facility.
The legal action could throw cold water on the owners´ plan to sell the refinery and storage and distribution facilities through a bankruptcy process.
That plan, announced last month, follows a failed effort at the turn of the year to sell the facility to start-up firm Atlantic Basin Refining in 2014.
According to the new lawsuit filed against Hess in September, the local government is seeking damages of at least $1.5 billion, which includes at least $150 million in annual benefits to the Virgin Islands in 2012-22 when Hess was obligated to continue operating the refinery.
“Those damages will be tripled under the Virgin Islands’ Criminally Influenced Corrupt Organizations law, under which the Government brought its action,” the attorney general´s office said.
Hess could not be reached for comment.
The subpoena “seeks information and documents related to, among other things, the decision to shut down the refinery, the company’s profits from the refinery, activities related to the maintenance of the refinery that might have been the cause of a number of the environmental incidents, and any agreements with Hess or other parties that might have benefited financially from the refinery.”
PDVSA is obligated to respond by November 2.
Venezuela´s foreign ministry has received the subpoena, a ministry official confirmed. Another official from the country´s energy ministry dismissed the charges as politically motivated.
“The Government of the Virgin Islands will investigate Venezuela’s conduct and will follow the law and facts, wherever and to whomever they lead,” said Claude E. Walker, the acting attorney general of the US Virgin Islands. “Shutting down the plant was not only devastating to the people of the Virgin Islands, it was, as our lawsuit lays out, also illegal.”
The US Virgin Islands says the refinery shutdown cost thousands of jobs and caused “significant environmental consequences.”
In 2014, Hess agreed to pay $40 million to address groundwater contamination, a settlement which HOVENSA said last month would be paid from the sales proceeds resulting from the bankruptcy.
Hess also has been fined by the U.S. Environmental Protection Agency for violations of the Clean Air Act.