Hovensa to Invest US$400mn-450mn Through 2006

The 495,000 barrel a day (b/d) Hovensa refinery in the US Virgin Islands plans US$400mn-450mn capital expenditure from 2004-2006 in its clean fuels program, Amerada Hess spokesperson Jay Wilson told BNamericas.

Amerada Hess and Venezuela's state oil company PDVSA each own 50% of the refinery.

The investment is to meet clean fuel regulations in the US, and will not lead to any capacity increase. Hovensa itself, rather than its parents, will make the investment.

Hovensa's net debt is practically zero, with US$400mn debt and almost US$400mn cash, Wilson said. Furthermore, the refinery has "significant" cash generation and so would not face problems in raising the money for the investment.

There is "no truth" in reports that Hess could sell its stake in Hovensa to Citgo, the US refining and distribution subsidiary of PDVSA, Wilson said.

Hispanic Press News reported that PDVSA could sell its 50% to Citgo, which would then buy out Hess. Citgo currently buys half of Hovensa's output.

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