By NAN Business Editor
News Americas, NEW York, NY, Fri. July 6, 2018: A Caribbean-based refinery that was closed in 2012 could be reopened as early as 2019.
U.S. Virgin Island Governor, Kenneth E. Mapp, made the announcement recently, after inking a $1.4 billion landmark deal to restart the St. Croix refinery.
The Government of the Virgin Islands entered the agreement with ArcLight Capital Partners, LLC, the owners of what had been one of the largest oil refineries in the world when it was shut down six years ago.
The massive deal includes refurbishing the existing refinery located in St. Croix.
Once refinery operations commence at the end of 2019, as many as 700 permanent jobs will be created. The new jobs will be in addition to the more than 750 jobs now at the terminal storage facility. The initial refining operations provide for the processing of approximately 200,000 barrels of crude oil feedstock per day.
Upon the closing of the transaction, ArcLight Capital will make a $70 million closing payment to the Government of the Virgin Islands. The payment includes $30 million for the purchase from the government of approximately 225 acres of land and 122 homes. The property was acquired as part of the government’s settlement of certain claims against HOVIC, Pedevesa de Venezuela, Hovensa and Hess Oil Corporation. The closing payment also includes a $40 million prepayment of taxes by a new refinery entity created by ArcLight Capital to operate the refinery, Limetree.
Once refinery operations commence and after crediting the $40 million of prepaid taxes, Limetree will make annual payments to the government in lieu of taxes at a base rate of $22.5 million a year. With market adjustments based on the refinery’s performance, this could increase to as much as $70 million per year.
According to industry experts and consultants Gaffney, Cline & Associates, the government expects to receive more than $600 million over the first 10 years of the restart of the refining operations. This income is in addition to the $11.5 million currently flowing to the government from the oil storage terminal each year.