MOSCOW (MRC) -- China Petroleum & Chemical Corp., known as Sinopec, agreed to be the anchor customer at an oil terminal in the U.S. Virgin Islands to be refurbished by an affiliate of ArcLight Capital Partners LLC and Freepoint Commodities LLC, as per Hydrocarbonprocessing.
Sinopec will lease 10 MMbbl of the terminal’s initial 13 MMbbl capacity, according to Dan Hecht, general counsel for Freepoint. The affiliate, Limetree Bay Holdings LLC, was named the winning bidder on Monday by a U.S. Bankruptcy Court judge for the former Hovensa oil refinery in St. Croix. The terminal is located at a shuttered refinery, formerly owned by Hess Corp. and Petroleos Venezuela SA that was once the largest in the world.
Space to store oil has become increasingly scarce as the U.S. shale boom and production from Organization of Petroleum Exporting Countries has increased global supplies of oil and refined products such as gasoline and diesel to about 3 Bbbl -- a record, according to the International Energy Agency.
The former refinery covers 330 acres on an island in the Caribbean Sea about 500 miles north of Venezuela and 1,500 miles south of New York. Limetree, which is 80% owned by ArcLight and 20% by Freepoint, agreed to pay up to USD370 million for the facility. Of that, USD235 million will go to the Virgin Islands government and USD135 million to the bankruptcy estate.
The agreement still needs final approval from the Virgin Islands legislature. Once approved, Limetree will be able to bring about 2 MMbbl of storage online quickly, with another 11 MMbbl following in the ensuing months, Hecht said.
Sinopec agreed to a binding 10-year contract to take 75% of that, or about 10 MMbbl initially, Hecht said. Freepoint will lease another 2 MMbbl of capacity for fuel-oil storage, and the remaining 1 MMbbl will be marketed to other customers.
After the first phase is online, Limetree plans to expand storage capacity up to as much as 30 MMbbl at the facility, Hecht said. The company has agreed to invest at least USD125 million in facility enhancements, including the construction of a new dock to accommodate the largest crude tankers in the world.
As MRC informed earlier, BASF and China Petroleum & Chemical Corporation (SINOPEC) today inaugurated their world-scale isononanol (INA) plant in Maoming Hi-tech Industrial Development Zone, Maoming, China. The plant will be run by BASF MPCC Company Limited (BMC), which is a 50-50 joint venture between BASF and SINOPEC. It has an annual capacity of 180,000 metric tons. This is the first INA plant in China and will serve the growing demand for next-generation plasticizers.
Limetree would purchase the refining equipment as well, and will evaluate restarting some or all of it after getting the terminal running. The eastern part of the refinery, with about 360,000 bpd of crude processing capacity, has the highest potential for being restarted, according to the presentation.
Sinopec Corp. is one of the largest integrated energy and chemical companies in China. Its principal operations include the exploration and production, pipeline transportation and sale of petroleum and natural gas; the sale, storage and transportation of petroleum products, petrochemical products, coal chemical products, synthetic fibre, fertiliser and other chemical products; the import and export, including an import and export agency business, of petroleum, natural gas, petroleum products, petrochemical and chemical products, and other commodities and technologies; and research, development and application of technologies and information.