The Associated Press is reporting that the giant Hovensa oil refinery that has dominated the economy and part of the landscape of the island of St. Croix for decades will cease operations next month, the operator said Wednesday.
Local officials said the closure will slam the economy of the small U.S. territory, though oil analysts said it was unlikely to have a major effect on the global oil market.
The refinery, the largest private employer in the U.S. Virgin Islands and once one of the largest refiners in the Western Hemisphere, will be converted to an oil storage terminal, said Brian K. Lever, president and chief operating officer of Hovensa LLC, according to the report.
Losses at Hovensa, a joint venture of U.S.-based Hess Corp. and Venezuela's state-owned oil company, have totaled $1.3 billion over the past three years and were projected to continue due to reduced demand caused by the global economic slowdown and increased refining capacity in emerging markets, Lever said in a statement.
Hess announced in New York that it will take a $525 million after-tax charge against its fourth-quarter 2011 earnings due to the shutdown.
The refinery employs about 1,200 people in St. Croix and has approximately 950 contractors, according to Hovensa spokesman David Roznowski. About 100 people, including contractors, will work at the oil storage terminal, the company said.
For the full story, click here.