Feb. 1, 2003 – Anxiety is running high at Hovensa nowadays, according to several employees of the St. Croix refinery, with personnel at all levels fearing the worst — mass layoffs.
Those fears became reality Friday, as the company announced plans to cut costs drastically in the face of two months of political and labor unrest in Venezuela that has decimated oil shipments to the refinery.
About 300 employees of Hovensa contractors were let go Friday, and there is talk of more cutbacks ahead in the coming weeks. Carmelo Rivera, spokesman for one of the contractors, Turner St. Croix Maintenance, said 50 of its 438 employees were laid off Friday from various fields.
Narrowing down the roster of workers was hard, Rivera said. "Across the board, every area was affected, from office staff to pipefitters," he said, adding that workers were evaluated on various factors including job performance and skills.
Hovensa is a joint venture of Amerada Hess, parent company of Hess Oil Virgin Islands Corp., and Petroleos de Venezuela, the huge state-owned company of that oil-rich but politically paralyzed South American nation. The state company, commonly known by its acronym PDVSA, has been Hovensa's major supplier of crude oil. Now, drawing on other suppliers in a world market also anxiety-ridden over threats of war against Iraq, Hovensa is operating with about one-fourth its usual supplies of oil.
Unemployment on St. Croix has been in double digits for many months, with little prospect of an immediate turn-around given the national economic turndown and threat of war in the Middle East.
Alexander A. Moorhead, Hovensa vice president for government affairs and community relations, said on Friday that the company will do its best to tighten its purse strings and get through the slump. "We'll reduce expenses as much as possible and maintain a safe operation, while preserving the maximum yield on every barrel of oil we process," he told Isle 95 radio.
Hovensa was formed three years ago to facilitate the securing of funds for a $600 million coker facility, which began operation last summer, enabling the refinery to produce fuels from heavier, less-costly crude oil, mainly from Venezuela. The two-year construction phase was an employment boon for the island, as was a major overhaul of the refinery's catalytic cracker unit last year.
On the boards at the refinery is another major upgrade, a $600 million project to bring the refinery into compliance with U.S. Environmental Protection Agency guidelines for emissions. The new federal regulations take effect in 2007. The work was scheduled to start next summer.
Hovensa has now announced that it will put off the project for the time being.
Last September and October, St. Croix recorded the highest jobless rate at any time in the eight years for which statistics were provided by the V.I. Labor Department — 12 percent. Hovensa and its subcontractors are the bedrock of the island's private-sector employment.
Rivera said the feeling is tense and frustrating at the refinery. "There's some degree of helplessness," he said. "We can't control business trends in other places in a global economy."
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