Boston-based private equity firm ArcLight Capital, together with commodities trader Freepoint, unveiled plans on Tuesday to buy the Hovensa refinery complex in St. Croix in the Caribbean and turn it into a massive oil storage hub.
The partners also said China’s Sinopec, Asia’s largest oil refiner, has leased 75 percent of Hovensa’s existing crude oil storage capacity in a 10-year strategic deal for one of Asia’s biggest oil market players, according to a statement on Tuesday.
Existing capacity at Hovensa is for 13 million barrels of crude and oil products. Freepoint, which supplies fuel oil to Puerto Rico’s power utility, will lease 2 million barrels of fuel oil storage at the site.
ArcLight, which has operated oil storage facilities around the world, will be the majority owner of Hovensa, a refinery formerly owned by Hess and PDVSA that has been shuttered in recent years.
Stamford, Connecticut-based Freepoint, a merchant trader of oil and other commodities, said it would have a 20 percent minority stake in the venture.
The partners have plans to invest at least $125 million to boost storage and tanker loading and unloading capacity at the site in the U.S. Virgin Islands by the end of 2016, a source familiar with the plans said.
The investment will bring Hovensa’s total oil storage capacity to as much as 30 million barrels and make it one of the premiere oil storage and trans-shipment hubs in the strategic Caribbean region, the source said.
The plans also involve deepening the port to allow for fully loaded very large crude carriers to dock at the hub.