January 22, 2016 [OPIS] - Limetree Bay Terminals, or LB Terminals, the new owner of the Hovensa oil terminal at St. Croix in the Caribbean, is expected to see a full operational restart of 13 million bbl oil storage capacity at that facility within a short span of a few months after taking over the recently acquired facility on Jan. 8, 2016, industry sources in the Caribbean told OPIS on Thursday.
In the initial restart phase, the terminal in the U.S. Virgin Islands with a maximum 32-million-bbl storage capacity, will bring on 13 million bbl of storage by April. The quick turnaround on restarting the mothballed tanks is attributed to the relatively well maintained tanks at Hovensa.
The first 13 million bbl of capacity is already spoken for. Sinopec will take over 10 million bbl of capacity, and Freepoint Commodities, a minority stake owner of Limetree Bay, will take over 3 million bbl.
In the second phase, another 13 million bbl of storage capacity would be brought onstream by the end of summer, depending on demand from potential customers.
These Caribbean tanks could be used for storing and blending crude as well as storing gasoline, diesel, propane and fuel oil.
The quick restart means that Sinopec, one of the largest oil companies in the world, will emerge as a major crude player in the Caribbean very soon.
OPIS reported last week that the storage lease at St. Croix represented the first for Sinopec and Unipec, the oil trading arm of Sinopec, in the Caribbean. Unipec will join its Chinese rival, PetroChina, in the Caribbean market.
PetroChina has significant storage tank capacity at BORCO terminal for building bulk for fuel oil and crude deliveries to Asia. Unipec is expected to do the same for crude at St. Croix.
Limetree Bay Terminals has already executed a 10-year lease agreement for 10 million bbl of storage capacity with China Petroleum & Chemical Corp. (Sinopec) as well as lease agreements with Freepoint covering an additional 3 million bbl of capacity. That 10-million-bbl storage capacity is expected to be for crude.
Sinopec has an oil products and crude trading presence on the U.S. markets via Unipec. Unipec is focused on Asian and Chinese physical oil markets, but it has made a move to connect the dots around the world in the past few years.
The restart of St. Croix terminal is expected to have a long-term impact on storage demand, opening up another viable options for oil players in the Caribbean. St. Croix terminal is expected to compete with nearby terminals including Statia terminals, Buckeye’s St. Lucia and possibly Buckeye’s Yabucoa terminal in Puerto Rico.
The Limetree Bay terminal is an ideal storage facility catering to the Caribbean market and South America, based on its location.
Limetree Bay has the potential to be a “choice terminal” in the Caribbean, when compared with BORCO and Statia, for clean oil products due to its location relative to South America, in-line/closed loop blending capabilities and ship berths that are protected from weather, industry sources told OPIS last year.
“After all, Hovensa was a refinery” that boasted efficient logistics for crude and oil products storage as well as marine loading and unloading facilities, a source said.
Also, the terminal asset at St. Croix offers room for potential storage expansion as well, depending on capitalization of Limetree Bay, which is backed by rapidly expanding ArcLight Capital and Freepoint.
The St. Croix terminal restart is expected to have minimal impact on BORCO terminal in the Bahamas, which is much further north of the U.S. Virgin Islands.
BORCO terminal, which is owned by Buckeye, is more ideal for supplying the U.S. East Coast and Southeast markets, based on its closer proximity to the U.S. than Limetree Bay.
ArcLight Capital Partners has hired a veteran logistics marketer and oil trader to take charge of marketing at its newly acquired Hovensa oil terminal at St. Croix in the U.S. Virgin Islands, industry sources told OPIS on Thursday.
OPIS reported last week that ArcLight Capital had hired Keith Neal, a senior director of marketing at Buckeye Partners, to head Limetree Bay’s storage marketing effort. Neal will be an ideal fit for Limetree Bay, based on his background on marketing in the Caribbean market, sources said. Limetree Bay would need personnel with experience to kick start its St. Croix terminaling business as that storage facility has been idled since early last year.
It is noted that ArcLight has hired several of Buckeye’s senior executives in the past.
Former Buckeye executive Gerry Ashcroft is to oversee several ArcLight Capital’s assets including Gulf Oil and Limetree Bay.
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