At VIFreepBreaking NewsBusiness NewsSt. Croix News

HOVENSA Assets Sale Could Be Finalized As Early As December 4

Mary-Grace-Walrath

U.S. Bankruptcy Court Judge Mary Walrath

CHRISTIANSTED – The terminal assets of the idled HOVENSA refining complex on the St. Croix will come up for auction in a U.S. Bankruptcy Court hearing on November 10, but a final sale is contingent on local government and legislative approval of an operating agreement.

Bids are due on November 5, and an intended sale hearing will take place on November 12, according to bidding procedures issued by the bankruptcy court in Delaware. A sale is scheduled to close on December 4.

Securing local approval may pose the most formidable challenge to HOVENSA´s owners, Hess subsidiary HOVIC and its 50% partner, Venezuelan state-owned Petróleos de Venezuela, S.A (PDVSA).

In January 2015, the Legislature tossed out a proposed operating agreement between the V.I. government and start-up firm Atlantic Basin Refining (ABR) that would have re-started the refinery.

In one scenario, the terminal assets will be awarded to lead bidder Limetree Bay Holdings, a subsidiary of U.S. private equity firm ArcLight Capital Partners, for $184 million. The terminal assets include 32 million barrels of crude and refined products storage and 10 tanker berths of up to 55-feet draught.

But the company´s “stalking horse” offer could be beaten by other contenders for the assets, including U.S. Buckeye Pipeline or U.S. energy and utility consultancy Monarch Energy Partners. The latter is eyeing the whole complex, including the 350,000 barrels-per-day refinery that it wants to restart.

Even if the assets are successfully sold at the bankruptcy court and the local government and legislature approve an operating agreement, Hess could face years of litigation.

The V.I. government filed a lawsuit against the company last month, accusing it of illegally abandoning the refinery operation before fulfilling its contract that ran to 2022, among other allegations. The government is seeking damages of at least $1.5 billion.

Hess dismisses the suit as “wholly without merit” and says HOVIC and the HOVENSA joint venture “operated properly and responsibly.” The company says the operating agreement for the refinery did not obligate HOVENSA to continue operating the facility at a loss.

HOVENSA closed the refinery in February 2012 after losing $1.3 billion over three years, and turned the facility into a storage terminal.

Hess last week filed a motion to shift the case from the territorial Superior Court to the federal bankruptcy court. The local government plans to file a motion to have the case restored to the Superior Court.

Acting Attorney General Claude Walker has subpoenaed PDVSA to explain its role in the refinery operation, and has granted a request by PDVSA to extend a November 2 deadline for responding by around two weeks, according to a lawyer representing the V.I. government.

Venezuelan officials say PDVSA was not involved with the operation of the refinery, and only supplied the facility with its heavy crude for processing.

The back and forth is likely to be a preamble to a lengthy legal battle that will outlast the fleeting bankruptcy proceeding and sales process.

But the V.I. government says it will not impede the sale.

“We will not hold the transfer of the assets hostage to the litigation,” the attorney for the local government said.

Previous post

CHAVEZ LEGACY: Feds Probe Corruption Angle At PDVSA

Next post

What Do You Know About G4S Providing Security At Virgin Islands Airports and Military Bases?

The Author

John McCarthy

John McCarthy

John McCarthy is primarily known for his investigative reporting on the U.S. Virgin Islands. A series of reports beginning in the 1990's revealed that there was everything from coliform bacteria to Cryptosporidium in locally-bottled St. Croix drinking water, according to a then-unpublished University of the Virgin Islands sampling. Another report, following Hurricane Hugo in 1989, cited a Federal Emergency Management Agency (FEMA) confidential overview that said that over 40 percent of the U.S. Virgin Islands public lives below the poverty line. The Virgin Islands Free Press is the only Caribbean news source to regularly incorporate the findings of U.S. Freedom of Information Act requests. John's articles have appeared in the BVI Beacon, St. Croix Avis, San Juan Star and Virgin Islands Daily News. He is the former news director of WSVI-TV Channel 8 on St. Croix.

No Comment

Leave a reply

Your email address will not be published. Required fields are marked *