An operating agreement has been reached for the Hovensa refinery complex between Arclight Capital and the US Virgin Islands’ Govenor.
In a press conference, Governor Kenneth Mapp revealed details of the landmark agreement, which will involve plans to turn the facility in St. Croix into an oil storage hub.
Sinopec has committed to a ten-year contract to purchase 75% of crude oil stored at the facility as part of its plans to expand into the Americas.
The terms of the agreement include $220 million in an upfront payment to the Virgin Islands government as well as up to $15 million in other payments.
Limetree Bay, an affiliate of Arclight will operate the storage terminal for a minimum of 25 years. It expects to operat the terminal at its full capacity of 32 million barrels of storage, by late 2016. A total of 13 million barrels are stored there with Sinopec and Freepoint Commodities purchasing most of what is available.
Storage capacity at the hub is expected to double as a result of the partners ploughing the facility with new investment.
Investments include tank, pump, deck and fuel rack inspections and restart, the construction of a marine facility for VLCCs as well as a $6 million asphalt plant.