Limetree Bay Terminals LLC (LB Terminals), an 80-20 joint venture of ArcLight Capital Partners LLC, Boston, and partner Freepoint Commodities LLC, Stamford, Conn., has finalized agreements with Hovensa LLC and the US Virgin Islands for the purchase and planned restart of idled storage terminals, refining units, and marine systems at Hovensa’s idled refinery at Limetree Bay, St. Croix (OGJ Online, Jan. 18, 2012).
The deal, which comes as part of Hovensa’s bankruptcy case (OGJ Online, Sept. 21, 2015), follows the late December approval from 31st Legislature of the US Virgin Islands of LB Terminal’s proposed operating agreement to restart terminal and storage assets at the St. Croix complex (OGJ Online, Dec. 22, 2015), ArcLight and Freepoint said.
While Bill No. 31-0283, which provides for adoption of the originally proposed operating agreement, was approved by the legislature on Dec. 29 and soon after signed into law by USVI Gov. Kenneth Mapp, LB Terminals negotiated a new operating agreement with the governor’s team ahead of the deal’s closing, the companies said.
Details of the new agreement were not disclosed, but ArcLight and Freepoint previously had agreed during testimony in Dec. 17-22 and Dec. 29 special legislative sessions on Bill No. 31-0283 to amend the proposal to address concerns expressed by government officials.
Now finalized, the operating agreement authorizes LB Terminals to own, restart, and operate the St. Croix complex, which includes:
• About 32 million bbl of crude oil and petroleum product storage.
• Idled refinery units with total peak processing capacity of 650,000 b/d.
• A deepwater port with nine ship docks, six tug boats, and various associated equipment and inventory.
With its initial focus on crude and product storage operations, LB Terminals already has entered into a binding 10-year lease agreement for 10 million bbl of storage capacity with China Petroleum & Chemical Corp. (Sinopec), as well as binding lease agreements with Freepoint for an additional 3 million bbl of storage capacity.
The operator also already is actively pursuing the restart of certain of the refinery’s idled process units, ArcLight and Freepoint said.
Original agreement
According to its initial operating agreement with the government for the St. Croix complex, LB Terminals agreed to:
• $220 million in an upfront payment to the USVI government and up to $15 million in other payments as part of a total deal of $360 million.
• A commitment to operate the oil storage and terminal for at least 25 years and up to 40 years.
• A minimum of 80 full-time workers, at least 80% of whom must be long-term USVI residents. Arclight also will invest at least $125 million over the first 2 years of the agreement to create additional job opportunities.
• Ongoing revenue to be paid to the USVI government, including an annual payment of 9% of revenue, increasing to 10% if financial targets are met.
• A commission of 10% to the government if the operation is sold, with a guaranteed commission of $25.5 million.
• A commitment to restart the refinery, or at the government’s option, dismantle any part of the refinery that is not being used after undertaking an 18-month period to evaluate potential profitability associated with resuming processing operations at the site.
• Donating 330 acres of land, 130 units of housing, a vocational school, and a community center to the government.
• An annual payment of $150,000 as rent for submerged lands (vs. Hovensa’s former $1/year, 60-year lease for submerged lands).
Contact Robert Brelsford at [email protected].
