MOSCOW (MRC) -- The owners of Limetree Bay, a Caribbean refinery that was once the largest in the Western Hemisphere, filed for bankruptcy after lenders balked at putting new cash into a project dogged by cost overruns and regulatory troubles, said Hydrocarbonprocessing.
The St. Croix refinery overhaul was the most expensive effort in nearly a decade to expand refining capacity in the hemisphere. Investors plunged several billion dollars into the project, aimed at taking advantage of its prime location along shipping routes in the Caribbean. The plan fizzled after construction delays and the COVID-19 pandemic, which slashed demand for fuel worldwide.
The refinery finally restarted in February - only to shut three months later when Limetree Bay ran afoul of U.S. environmental regulators who ordered shut after a series of fires and noxious gas releases. "Severe financial and regulatory constraints have left us no choice but to pursue this path, after careful consideration of all alternatives," Jeff Rinker, Limetree Bay's chief executive, said of the bankruptcy filing in a statement.
The U.S. Environmental Protection Agency in May ordered the plant to shut temporarily after the gas releases contaminated local drinking water, shut a school and led residents to complain of breathing problems and foul odors. The EPA order, and subsequent investigations by U.S. officials, made investors wary of investing the additional money needed to get the refinery restarted, the company said in court filings.
Late on Monday, Limetree and its debtors requested court approval to obtain up to USD25 million in so-called debtor-in-possession financing. This would allow the parties to immediately borrow USD5.5 million, with approval for rest of the amount at subsequent hearings.
More recently, lenders objected to the plant's call for new cash to complete the project, according to the head of EIG Global Energy Partners, the Washington-based private equity firm that leads the largest investor group. "EIG supports the company's efforts to secure funding," EIG Chairman Blair Thomas said in a statement, adding "to date the senior lenders have objected" to those efforts. The firm and its partners became "the reluctant owners" earlier this year when its original sponsor withdrew, he said.
Westbourne Capital, an Australian debt investor that provided a USD700 million term loan, holds the senior-most debt in the project and could decide the plant's fate, according to a person familiar with the matter who was not authorised to speak to media and declined to be identified. Westbourne did not reply to requests for comment.
As MRC wrote before, in early July, US crude stocks fell for the sixth straight week as refiners ramped up output in response to rising demand, according to the Energy Information Administration. Crude inventories fell by 6.7 million barrels in the week to June 25 to 452.3 million barrels, a steeper drop than the 4.7 million barrels expected by analysts in a Reuters poll.
We remind that Indian refiners, anticipating a lifting of US sanctions, plan to make space for the resumption of Iranian imports by reducing spot crude oil purchases in the second half of the year. The world's third-largest oil consumer and importer halted imports from Tehran in 2019 after former US President Donald Trump withdrew from a 2015 accord and re-imposed sanctions on the OPEC producer over its disputed nuclear programme.
Ethylene and propylene are the main feedstocks for the production of polyethylene (PE) and polypropylene (PP), respectively.
According to MRC's ScanPlast report, Russia's estimated PE consumption totalled 744,130 tonnes in the first four month of 2021, up by 4% year on year. Shipments of all PE grades increased. At the same time, PP deliveries to the Russian market were 523,900 tonnes in January-April 2021, up by 55% year on year. Supply of homopolymer PP and PP block copolymers increased, whereas shipments of PP random copolymers decreased.
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