Above: US Virgin Islands Governor John de Jongh

By the Caribbean Journal staff

HOVENSA, the St Croix-based oil refinery that was the largest in the Caribbean until it shuttered in 2012, has a new buyer.

And it could mean an economic rebirth for the island of St Croix.

The US Virgin Islands government announced that Atlantic Basin Refinery had reached a tentative agreement with the owners of the site, Venezuela’s PDVSA and Hess Corporation.

US Virgin Islands Governor John de Jongh said the government had reached an agreement with the buyers on a “detailed operating agreement” that will define their rights and obligations going forward.

The agreement marks the culmination of a sales process that first began in November 2013.

Under the operating agreement, the new owners are required to rebuild and restart the refinery, employ “hundreds” of Virgin Islanders and make “substantial payments to the government” totaling over $1.6 billion in fixed payments over the life of the agreement.

The deal would also include additional variable payments depending on the refinery’s profitability.

If the refinery is not restarted, the owners will be required to take the facility down and clean up the site.

“This will ensure that, whatever the circumstances, if there is not to be an operating refinery, we will not be left with an eyesore and a wasting asset,” de Jongh said.

Atlantic Basin Refining is a company formed specifically to acquire the property.

The transaction requires approval of the operating agreement by the legislature.

Under the deal, Atlantic Basin Refining will also be required to retain a “reputable refinery engineering firm with experience reconfiguring and rehabilitating world-scale oil refineries to develop a comprehensive rehabilitation and restart plan,” which would take an estimated nine to 12 months.

Before it shuttered, HOVENSA was the largest employer in the US Virgin Islands. At the time of its closure, de Jongh called its closure a “catastrophic decision.”

Indeed, in addition to its employment impact, HOVENSA paid tens of millions in taxes as well.

“After the restart, the refinery is expected to employ over 700 workers, with over 500 full-time employees and over 200 contractors,” de Jongh said. “Once restarted, the refinery will provide a tremendous boost to the St. Croix economy and generate hundreds of additional jobs to support the refinery’s operations and employees.”

The base term of the agreement is for 22 years, with the option to extend for two additional 10-year terms.

“Our efforts have been driven by my strong belief that restarting the refinery was the quickest and best way to generate jobs and economic recovery on St Croix,” de Jongh said. “It’s been a long process, but I believe there is finally light at the end of the proverbial tunnel that has the potential to bring some long-awaited and much-needed economic activity to the island of St Croix.”