HOVENSA executives have hit the road to raise $1 billion for the construction of the refinery’s coker project.
HOVENSA vice president Alex Moorhead said Rene Sagebien, the company’s president and chief operating officer, is currently in the midst of a city-to-city "road show" on the mainland visiting potential investors. The $1 billion in bonds the company is seeking would fund the coker construction, refinance debt and pay for smaller projects over the next five years, Moorhead said.
"We’re expecting the bonds will be sold by the end of November," Moorhead said in an interview on WSTX radio Monday.
If the financing for the project is completed by early December work is expected to begin in January and continue until January 2002. Moorhead has said that at the height of the coker construction project next October some 2,000 workers will be employed.
Last year, Hess Oil of the Virgin Islands Corp., seeking a partner to better position the company for the future, entered into a joint venture with Venezuela’s national oil company, Petroleos de Venezuela, to form HOVENSA. According to Moorhead, HOVIC had lost approximately $1.2 billion between 1991 and 1998.
The joint venture will, among other things, include a long-term supply contract to purchase Venezuelan oil, fulfilling about 50 percent of the refinery's operating requirements.
Every time the market goes down, the company's entire inventory has to be revalued. That applies to oil en route from such places as Saudi Arabia, which can take up to 45 days to arrive. The voyage from Venezuela, in contrast, is only two days and the company won't have to pay for the crude until it's used.
The Venezuelan crude, however, is heavier and needs a coker to be processed. Without the coker HOVENSA is forced to process crude oil that is $2 to $4 per barrel more expensive than what the company’s competitors process.
In another effort to improve the refinery’s profitability, HOVENSA hired Jacobs Panamerican Corp. in July to manage the maintenance and reliability of the refinery’s petroleum processing equipment.
The St. Croix refinery, the largest in the Western Hemisphere, employs some 850 people and produces about 400,000 barrels of oil a day, although it has the capability to pump out 500,000 barrels a day. Leon Hess constructed the facility in 1966; it is now the largest private-sector employer in the territory.
