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Halted Settlement Discussions Pose New Challenge for Caribbean Refinery Restart

Talks on the last major regulatory hurdle to restarting an idled Caribbean oil refinery have dragged on, threatening further delay to a private-equity backed venture that seeks to profit from a 2020 clean-air fuel mandate.

Limetree Bay Refining remains in discussions with federal and local officers on changes to a 2011 agreement with the previous owner of the refinery, Hovensa, a venture between Hess Corporation and Venezuela’s state-run oil agency PDVSA.

“The parties are about 80%-85% through the document and appendices,” stated Jean-Pierre Oriol, commissioner of the U.S. Virgin Islands Division of Planning and Natural Resources that is a party to the settlement.

Limetree Bay is undergoing a $1.6 billion refurbishment aiming to satisfy an International Maritime Organization requirement that ocean-going vessels cut sulfur emissions to reduce air pollution on January 1.

The mission will restore a division of the refinery to process around 210,000 barrels per day (bpd) of crude, down from 550,000 bpd before it filed for chapter protection.

The 2011 settlement required over $700 million in new pollution controls to settle breaches of the U.S. Clean Air Act. The modifications are anticipated to require spending less than $700 million, reflecting the smaller processing capability.

Limetree Bay and other refiners intention to process cheap, high-sulfur crude into clear fuels and seize anticipated higher margins as terminals and shippers stock up.

The re-functioning of the plans already has been pushed to early 2020 from late this year, a delay which means owners Arclight Capital Partners and trader Freepoint Commodities will miss initial demand for marine fuel with less than 0.5% sulfur.

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Peter Leonhard

The group employed Peter Leonhard last year as a column lead. Previously he was leading the Natural Gas column, later took the wheel of Power and Energy column. Peter alongside an associate, looks after the functioning of the column. Right from sourcing information to writing news, they both do it all. Peter is also an environmentalist working on the climate crisis.

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