Jan. 19, 2002 — About 140 contract maintenance employees at the Hovensa refinery will be laid off in the next few weeks, refinery officials announced Friday. In the meantime, Hovensa has implemented cost-reduction measures in response to a market decline for petroleum products coupled with increased outlays for security.
Hovensa Vice President Alex Moorhead said in a press release that the company’s contractors are cutting staff because some work associated with the refinery’s $550 million coker project has been completed. Moorhead noted that the workers being laid off are not employees of Bechtel International, the lead contractor on the coker project.
The contractors letting workers go are Crosstech, Industrial Maintenance Corp., Jacobs Industrial Maintenance Co., St. Croix Basic Industries and Triangle Construction and Maintenance Inc., Moorhead said.
The layoffs will leave about 3,100 people employed by contractors at the refinery.
"Hovensa regrets the adverse impact that the reduction in contractor manpower will have on the workers who are being laid off and on their families," Moorhead said.
Meanwhile, he said, Hovensa has implemented "cost-reduction measures in response to a marked decline in demand for petroleum products as a result of a weak economy and a warm winter." At the same time, he said, there have been increased expenditures for security at the refinery, the largest in the Western Hemisphere.
Hovensa currently refines about 400,000 barrels of oil a day, with the capacity to process 500,000. Because of the weak economy and the increased security costs, Moorhead said, Hovensa recorded a loss in the fourth quarter of 2001.
Work on the coker is scheduled to be finished in the second quarter of 2002, Moorhead said. Currently, Bechtel is managing about 1,500 workers on the project.
Hovensa is 50/50 a joint venture of Amerada Hess Corp. and Petroleos de Venezuela SA. The joint venture was formed in late 1998 to obtain $600 million in financing for the construction of a long-planned coking unit capable of processing 58,000 barrels of oil per day and related facilities, and to repay existing bank debt.
Once the coker is completed, Moorhead said, the refinery will be able to process a large quantity of heavy Venezuelan crude oil, which is less expensive than the higher-grade crudes that the refinery currently can process. As a result, he said the company’s average cost for crude oil will be reduced.
