The Hess Corp. announced Monday it plans to sell its terminal network in the United States and close its refinery in Port Reading, N.J., as part of its effort to get out of the oil refining business and concentrate on exploration and production, according to a news release issued from the company’s New York corporate offices.
The announcement Monday prompted Gov. John deJongh Jr. to remind the company it still has obligations to the U.S. Virgin Islands.
“We believe this decision is consistent with my Aug. 6 letter to Hovensa’s owners … that if the owners wish to exit the refinery business, they must agree to a valid process to sell the refinery to a willing buyer or comply with all of their contractual obligations under the existing Concession Agreement with the Government of the Virgin Islands and all of their environmental obligations under the law.”
The company’s news release did not specifically mention the St. Croix facility. It said the terminal network it plans to sell "is located along the U.S. East Coast and has a total of 28 million barrels of storage capacity in 19 terminals, 12 of which have deep water access. The terminals previously served as the primary outlet for Hess’ share of production from its Hovensa joint venture refinery, most of which was used to supply Hess’ retail and energy marketing businesses." It added that the company’s St. Lucia oil storage terminal, with 10 million barrels of capacity, will also be included in the package.
As of the close of business Monday, the company had not responded to questions from the Source about how St. Croix figures into the sale.
In announcing the planned sale, the company noted that the terminal system "is no longer core to the company’s operations."
Over and above whatever the sale yields, the transaction should release approximately $1 billion of working capital for redeployment to fund future growth opportunities for the company, the release said.
The New Jersey refinery, which will be closed by the end of February, is a fluid catalytic cracking unit that primarily manufactures gasoline and components used for blending heating oil. The refinery incurred losses in two of the past three years and the financial outlook for the facility is expected to remain challenged.
“By closing the Port Reading refinery and selling our terminal network, Hess will complete its transformation from an integrated oil and gas company to one that is predominantly an exploration and production company,” said John Hess, chairman and CEO of the company. He said Hess will redeploy “substantial additional capital to fund its future growth opportunities.”
Hess said it will continue its long-term commitment to its retail and energy marketing businesses, and vowed to "take all the necessary steps to ensure supply security, competitive prices and high quality service for its customers."
Hess has retained Goldman, Sachs & Co. as its financial advisor for the divestiture of the terminal network.