Economic and policy Insight: ‘Possible implications of the restart of the St Croix refinery for the Caribbean’
In a marathon meeting that started last Wednesday and ended past midnight Thursday, the Senate of the USVI, voted in favor of a proposal to restart the refinery. Owners of the idled oil refinery in St. Croix, U.S. Virgin Islands, which was once one of the world's largest refineries, plan to invest $1.4 billion to refurbish and restart a portion of the plant.
In the 1970s, the refinery on St. Croix was able to process 650,000 bpd. It halted processing in 2012, filed for bankruptcy three years later and was sold to ArcLight and trading firm Freepoint Commodities.The two companies run Limetree Bay Terminals, a 25 million barrel oil storage and marine terminal on the site.
ArcLight Capital Partners, a private equity firm that owns 80 percent of Limetree Bay Terminals LLC, expects the former Hovensa (used to be a joint venture between the Hess Corporation and PDVSA) plant to be able to process 200,000 barrels per day of crude and deliver fuels to market by January 2020. The refinery would supply low-sulfur fuels under an International Maritime Organization mandate that begins in 2020. Also the Caribbean is facing declining fuel supplies as a result of the problems that the Venezuelan oil industry has been facing, which has sharply cut its shipments to the region. If this situation becomes structural, this means that the Venezuelan oil industry will lose its Caribbean market share.
Reopening the refinery will be a boon to the U.S. Virgin Islands, which has struggled economically since it closed in 2012. The government stands to collect $600 million in revenue from the refinery over its first 10 years in operation. As part of its agreement with the USVI government, Limetree has purchased 225 acres of land and more than 100 homes surrounding the refinery to facilitate the restart, U.S. Virgin Islands Governor Kenneth Mapp said in an interview. "They've already begun spending money," Mapp said. "Assets and resources are already on their way."
Restarting the facility will bring an estimated 1,000 construction jobs and 700 permanent jobs (both of which probably partially would have to supply from outside of the islands) to the site, in addition to the 750 workers at Limetree’s nearby oil terminal site. It is expected that considering the difficult uncertain circumstances workers at refineries in Venezuela, Curacao, and Aruba are or may end up in, that many may soon find their way to St. Croix.
By an observer