In an echo of the announcement of a deal “in principle” two days before the Nov. 6 election for a fuel purchaser, Limetree Bay and Gov. Kenneth Mapp announced Friday that the supply deal is closed and British oil giant BP is the supplier and purchaser.
Both Limetree Bay’s announcement and a statement from Government House suggest this means the refinery will restart. Yet neither mentions the transfer of $70 million to the V.I. government that is to take place when the final contracts for operating a restarted refinery are closed.
Limetree Bay’s announcement talks about a supply and purchase contract, making no mention of operating the refinery, while Government House’s announcement asserts Limetree said BP is also to operate the refinery.
The company’s press release says it “has reached a definitive agreement with BP’s supply and trading arm – for tolling, supply and offtake of the restarted refinery,” then has a quote from Mapp touting the importance of the project. It also says the deal is the culmination of the deal “in principle” it announced earlier.
Limetree Bay’s earlier announcement said “the oil company would enter into a tolling agreement and serve as the refinery’s supply and offtake counterparty.”
A supply counterparty is an entity that enters an agreement to supply a product under contractual terms. An offtake counterparty agrees to buy a product. This could, for example, refer to a contract to sell crude oil to the refinery and also buy refined products from it later.
Government House released a similar but slightly different statement, saying “Limetree Bay Refining announced Friday that it has reached a ‘definitive agreement’ with British Petroleum to operate the refinery on St. Croix’s south shore” (emphasis added). BP was formerly named British Petroleum.
BP’s corporate website lists four divisions or arms: Upstream; Downstream, Supply and Trading; and Corporate Functions. Supply and trading deals with buying and selling. It places refining operations within the “Downstream” arm.
Both releases are unclear on whether this not-yet-completed contract is the final piece to restart the refinery or a step toward the final piece needed to restart.
“Following the announcement, Gov. Kenneth Mapp and Lt. Gov. Osbert Potter met with officials from Limetree Bay and British Petroleum (BP) to further discuss how the finalized deal will benefit the Virgin Islands,” the Government House release states. But is this the final deal?
“This agreement marks a significant milestone for the refinery restart effort,” Mapp also said.
Aside from the restart itself, at stake is $40 million in short term loans and $30 million from a land purchase that are due the V.I. government on closing an operating agreement for the refinery.
In August, administration officials testified to the Legislature that the deal and the $70 million were awaiting a final contract to actually operate the refinery.
“The money was always contingent on ArcLight securing the deal with an operator, which they have not done yet. When that happens then it will be immediate,” Finance Commissioner Valdamier Collens told the Finance Committee on Aug 29.
“They are waiting to finish up the negotiations with the actual franchisee that is going to be running the operations,” Budget Director Julio Rhymer said at the same hearing.
Neither the Limetree Bay nor the Government House press release mentions the release of the $70 million the government is eagerly awaiting.
Limetree Bay’s release, sent at 3:24 p.m., says for further information contact Limetree Bay at [email protected] Seventeen minutes later, the Source sent the following questions to that email address:
– Has Limetree Bay released the $70 million, reflecting that a contract is in place to restart and run the refinery?
– If not, why not?
– If so, why has this not been publicized?
– Will anyone representing Limetree Bay go on record by name saying there is a 100 percent certainty you will restart the refinery?
Limetree Bay had not responded as of 1 a.m. Saturday.