A US bankruptcy court today approved the sale of the Hovensa oil terminal in the US Virgin Islands to Limetree Bay Holdings, a unit of US private equity fund ArcLight Capital Partners.
The approved transaction includes an option to acquire the mothballed 350,000 b/d Hovensa refinery. The value of the transaction is "well north" of the $184mn lead stalking horse bid that ArcLight had originally placed before the court, sources close to the transaction told Argus.
ArcLight outbid US midstream company Buckeye Partners, which has other storage assets in the Caribbean.
The court approval clears a major hurdle to reviving the once vibrant downstream complex on the island of St Croix. But the fate of the transaction now lies with the US Virgin Islands legislature, which must approve an operating agreement. The legislature last December rejected an operating agreement with start-up firm Atlantic Basin Refining that intended to restart the refinery.
Hovensa is owned by US independent Hess subsidiary Hovic and Venezuelan state-owned oil company PdV. Neither company commented on the transaction.
The total value of the deal will be announced tomorrow by US Virgin Islands government Kenneth Mapp.
Located on the island of St Croix, the refinery had a peak capacity of roughly 500,000 b/d and supplied the US Atlantic coast products market. Much of the heavy crude that was processed at the refinery came from Venezuela.
But costly energy sources to run the facility on the island eroded its bottom line, particularly in light of more competitive refineries on the US Gulf coast with abundant gas supplies. The refinery reduced capacity to 350,000 b/d in 2011 and shut completely in early 2012 after losing $1.3bn over three years.
