Buckeye shows interest in Hovensa assets
OREANDA-NEWS. Buckeye Pipeline has sought changes to the bidding process for Hovensa's extensive Caribbean storage and idled refining assets as creditors seek a buyer for the facility.
Hovensa, a 50:50 joint venture of Hess and Venezuelan national oil firm PdV, last month said it would sell its idled US Virgin Islands refinery and storage assets through a bankruptcy process. Limetree Bay Holdings was designated a lead stalking horse bidder with a \\$184mn offer.
US midstream company Buckeye, which operates the 25mn bl Bahamas Oil Refining Company International Limited (BORCO) terminal, challenged bidding procedures last week for the facility that includes 12mn bl of active petroleum storage and another potential 19mn bl needing repair. The challenge was made through filings in Hovensa's bankruptcy proceedings.
The idle tanks and 10 deepwater ship berths could give Buckeye a second, more eastward terminal near South American crude production that could serve as a way station between both US Gulf coast and European markets. A company representative could not be immediately reached for comment.
The US Virgin Islands government and a US government trustee have also challenged the bankruptcy process which blocks potential bidders from contacting the government directly and provides for a "stalking horse" process that offers a break-up fee for a lead bidder. The local government has also questioned the relatively short sales deadline, while the US trustee noted it had already been approached by potential bidders having trouble getting in touch with the current owners.
"The contact by this potential bidder indicates that, despite the debtor's allegations that the pre-petition marketing of the debtor's assets was extensive, there may be other potential bidders for the debtor's assets," the trustee wrote.
The Hovensa refinery had a peak capacity of roughly 500,000 b/d and was a supplier to the US Atlantic coast products market. But a lack of cheap energy on the island and the abundance of natural gas in the US Gulf coast swiftly eroded the facility's competitiveness. The refinery reduced capacity to 350,000 b/d in 2011 and idled completely in 2012 after losing \\$1.3bn over three years. Any buyer wishing to operate the refinery would still need a way to power the operation and remain competitive against the US Gulf coast and European refining complexes.