Hovensa announced early Wednesday morning that it will immediately commence shutdown of its refinery on St. Croix, U.S. Virgin Islands. Following the shutdown, the complex will operate as an oil storage terminal.
Losses at the refinery have totaled $1.3 billion in the past three years alone and were projected to continue, according to a statement from the refinery. These losses have been caused primarily by weakness in demand for refined petroleum products due to the global economic slowdown and the addition of new refining capacity in emerging markets. In the past three years, these factors have caused the closure of approximately 18 refineries in the United States and Europe with capacity totaling more than 2 million barrels of oil per day. In addition, the low price of natural gas in the United States has put Hovensa, an oil-fueled refinery, at a competitive disadvantage.
“We deeply regret the closure of the Hovensa refinery and the impact on our dedicated people,” Hovensa President Brian Lever said in the statement. “We explored all available options to avoid this outcome, but severe financial losses left us with no other choice. We will provide significantly enhanced benefits for those union and salaried employees who are impacted and will work closely with the government of the U.S. Virgin Islands to ease the transition for the rest of the community.”
After formal shutdown of the refinery, which will occur by the middle of February, most of those employed at Hovensa will continue working through a transition period. Thereafter, approximately 100 people will remain to work at the oil storage terminal.