Dear Source:
Delta Petroleum has a 40 year history of providing cost-effective petroleum products to the Caribbean islands, and our storage at Hovensa is used to support these markets and also now, the delivery of fuel to WAPA in St. Croix and St. Thomas. The shutdown of terminal operations at the Hovensa refinery would force fuel suppliers, like us, to increase prices throughout the region. Hovensa’s notification that it will completely shut down the facility in January is real, and we call on the Senate to approve the sale of Hovensa to Atlantic Basin Refining (ABR) in the interest of all Virgin Islanders in particular and the Caribbean in general.
The Hovensa facility is a key part of our energy distribution chain – earlier, as a fuel supplier, and now as a storage terminal and the hub for our distribution chain. We bring products from the U.S. mainland and other global regions to Hovensa in large ships, store it there, and then distribute products to our regional customers in small ships. This makes Hovensa, and St. Croix, a hub of economic activity and supports jobs on the island that would otherwise go to other competing storage terminals in places such as Puerto Rico, Antigua or Trinidad.
Having done business with Hovensa for a long time we believe their notice to completely shut the facility down and no longer maintain storage terminal operations is real-based on our estimates of the high costs of running the terminal in its current limited capacity. All current customers there have been told to be prepared to exit on short notice. A shutdown will cost Hovensa their operating permits, and any future attempt to restart the facility as an operating, job-providing, government-revenue producing asset will be lost forever. If the sale Hovensa to ABR does not go forward St. Croix will lose again when the storage terminal closes.
Delta’s foremost concern is that shutting down Hovensa would increase the cost of fuel products supplied to customers in the Territory, especially St Croix. This would then increase the overall cost of living in the USVI and make the Islands a less attractive investment destination for companies deterred by higher energy costs.
We believe that ABR’s proposition to buy and restart the refinery is the best available option for saving the facility and reestablishing the St. Croix economy with a large workforce operating the refinery. ABR’s business plan to restart Hovensa would also bring down the cost of petroleum products in the USVI and Caribbean in general.
This is an incredible opportunity for the USVI to hopefully reverse its economic fortunes and bring jobs back to the islands, while once again playing a major role in the regional and global energy industry. Not only would the restart of Hovensa create hundreds of jobs, it would also immediately generate $40 million in tax revenue for the government of the USVI, and more as the refinery became operational.
Delta Petroleum has a continuing interest in supplying petroleum products to the USVI in any feasible manner whether or not Hovensa remains a viable terminal or refinery operation – investing in new storage if necessary. However, we want the Hovensa refinery to restart and continue terminal operations under a new owner because this is will benefit the USVI economy and improve regional energy security.
For these potential benefits to become reality we need the USVI Senate to act, and act now. By continuing to delay the decision on whether to ratify the operating agreement between ABR and the government the Senate is putting the total business deal in jeopardy. If the Senate does not act before the end of 2014, the storage terminal will close and it could be too late to save Hovensa. Inaction by the legislature will cost the Islands jobs, revenue, and drive up the already high cost of living. The Senate must allow the sale of Hovensa and pass the operating agreement between the USVI government and ABR. It is time for all sides to see through the seeming mistrust and misinformation that exists and unite to insure the Territory’s future welfare.
Thomas Esposito, president of Delta Petroleum Group Ltd.
Tortola, BVI
