Gov. John deJongh Jr. met with the owners of the Hovensa refinery on St. Croix Tuesday to discuss the governor’s counter-proposal to Hovensa’s plans to shut the refinery and convert the site on St. Croix’s south shore to an oil storage terminal, according to a statement from Government House.
Hovensa abruptly announced the imminent closure of the half-century-old refinery in January. Company officials said at the time the complex would continue operation as an oil storage terminal, employing around 100 people.
As a result of the cessation of refinery operations, over 2,000 former Hovensa and Hovensa subcontractor employees lost their jobs this year, greatly increasing the unemployment rate on St. Croix.
The administration and Hovensa have been at loggerheads over how to proceed and what Hovensa’s legal obligations are.
In July the government hired financial analysis company Duff & Phelps to review Hovensa’s proposal and to come up with possible alternatives. DeJongh announced that the company’s investigation found that the Hovensa facility could still be run as a profitable refinery if certain upgrades were made.
Duff & Phelps found that the key element hindering the refinery was its reliance on burning oil to create electricity. If the refinery could be switched to a liquid natural gas system, it could drastically cut its overhead and continue refining oil at a competitive price, they found.
DeJongh proposed Hovensa commit to making such an upgrade or sell the facility to a company that would. If not, deJongh has said he expects Hovensa to continue to honor its responsibilities under its current concession agreement with the government, known as the Third Extension Agreement, including the supply of fuel oil to the territory at a discount.
DeJongh said he would go to court if necessary.
Hovensa officials disagree and asked for this meeting in late September.
DeJongh was joined at today’s meeting by Lt. Governor Gregory Francis, Attorney General Vincent Frazer, Government House Deputy Chief of Staff Nathan Simmonds, Peter Hiebert of the government’s Washington, D.C., law firm Winston and Strawn, financial advisor David Paul of Fiscal Strategies, and David Herr of Duff and Phelps, the government’s consultant on Hovensa.
The Hovensa team included its owners and counsel.
At the meeting, held at Government House on St. Thomas, the parties discussed deJongh’s counter-proposal and the current status of negotiations. The owners of Hovensa have informed the governor that they will be presenting a written proposal in the near future.
