Hess Corp and Venezuela’s state-run PDVSA have found an interested buyer for their 350,000 barrel per day (bpd) Hovensa refinery in the U.S. Virgin Islands, sources close to the deal told Reuters on Wednesday, confirming a local news report that could open the doors for the facility to run cheap U.S. crudes.
Refining at the plant, owned 50 percent by Hess and 50 percent by PDVSA, has been halted since 2012 but its owners have been using it as a terminal.
The operation would be part of a broader attempt by PDVSA to sell its foreign refining assets, including its unit in the United States, Citgo Petroleum; its stake in Chalmette jointly owned with Exxon Mobil ; and a specialized network operated by Neste Oil.
The Virgin Islands Daily News quoted Governor John deJongh Jr. as saying he would like to see the sale done before he leaves office in January.
The Islands’ government has been trying to find a buyer interested in restarting the facility since it was converted into a terminal in early 2012. It had set August as deadline to receive a proposal. That was later extended.
Venezuela’s PDVSA and Duff & Phelps, a financial advisory company hired by the Virgin Islands’ governor, declined to comment.
The company that submitted the offer, which was not identified, would want to reopen the facility as a refinery to run cheap U.S. light sweet crudes instead of heavier Venezuelan grades, deJongh reportedly told Senators.
The United States is increasing shale crude output fast and the government is under pressure to lift a decades-old export ban that is prompting refining companies to run larger volumes of local crudes, while cutting imports.
The deal has not yet been finalized, a source told Reuters, and an engineering assessment is expected to decide the crude it would run. The estimated cost of reopening the refinery is about $1.2 billion and it would take two years, the Virgin Islands Daily News said.
The buyer was described by the newspaper as a U.S.-based company with the ability to raise capital but limited refining experience. Sources said it was a private equity firm.
Cash-strapped PDVSA hired banking company Lazard to receive offers for its 749,000 bpd refining network in the United States, operated by Citgo, and the firm set late September as deadline in a potential $8-10 billion deal.
Separately, PDVSA also tapped Deutsche Bank to explore a sale of its stake in the 192,500 bpd Chalmette refinery in Louisiana, after offering for sale since 2012 its stake in Nynas, a network of four refineries in Sweden, Scotland and England.
Two sources close to PDVSA confirmed that Lazard is also managing offers for Hovensa.