Exxon...What's The Latest?

Does anyone have any news to report? Holland Redfield was talking about Exxon people being at Hovensa openly on his radio show yesterday. Just wondering hopefully!

He has way better connections than anyone I know.

Trust me. If when something happens it will be all over the news everywhere. Holland Redfeld has less clout than he thinks he has since he's no longer in office and nobody knows what he's been doing or where he is. Best to wait for announcement from Exxon, if any, but don't count on anything.

Trust me. If when something happens it will be all over the news everywhere. Holland Redfeld has less clout than he thinks he has since he's no longer in office and nobody knows what he's been doing or where he is. Best to wait for announcement from Exxon, if any, but don't count on anything.

Exactly

Exxon can end up part owner of Hovensa without any sale going thru. If there is a settlement with Venezuela over Exxon's seized assets in that country, then Exxon could end up with Venezuela's share of Hovensa. Exxon and Hess would then be joint owners. Exxon could decide to do whatever they want (with agreement from Hess), i.e. use it as a storage terminal, or even restart limited operations - all without a 'sale' going through.

Key point being: no sale = no big payday for the VI government. Of course some property taxes may be due, and there is always negoitiations to restart operations under the 'next' extension agreement with a few jobs thrown in - all in time for elections. Nicely played boys.

Grapevine has it that some big announcement is coming beginning of next month (March).

Great news!!! Lets hope it pans out.

Great news!!! Lets hope it pans out.

This is no news. Please don't let your elected officials and has-been political hacks string you along. If Exxon inherits part of Hovensa, they are no more required to operate a refinery than Hovensa is currently not operating one now.
In a nutshell:
1. The last agreement required Hovensa to operate a refinery, in exchange for jobs and a property tax break. They were barred from operating a stand alone storage facility.
2. The current 4th agreement removed the requirement for them to operate a refinery.
3. The current 4th agreement requires them to list it for sale, but does not require them to sell.
4. The current 4th agreement removed the penalties of hundreds of million$ in breech fees for violating the 3rd agreement.
5. The current 4th agreement allows Hovensa (or any current owner including Exxon) to operate a storage facility only.

So, until your chickens hatch, don't count them.

Wake me up if and only if it actually opens. I will be at the party with bells on.

It will be deJonge's last heroic act before he is out of office. I hope he is successful in getting a new player onto St. Croix.

What was his first heroic act? Did he ever have one?

I thought bringing Diageo was a great service to the territory. It was bit more expensive than most would have liked to see but is definitely paying dividends now.

I thought bringing Diageo was a great service to the territory. It was bit more expensive than most would have liked to see but is definitely paying dividends now.

Totally agree with you. However, many folks lacking in the ability to do basic math will swear up and down what a terribile deal Diageo was. Sad.

I thought bringing Diageo was a great service to the territory. It was bit more expensive than most would have liked to see but is definitely paying dividends now.

Totally agree with you. However, many folks lacking in the ability to do basic math will swear up and down what a terribile deal Diageo was. Sad.

I'm betting the people that work there (making good $) think it was a good deal! I know that there are tons of tourists that visit it and think it's great.

I'm glad Diageo is here! That's about 80 jobs that pump dollars into our community.

Okay. Possibly one heroic act.
Prior to the Diageo deal we used to give Cruzan 5% of the cover over.
Then deJongh agreed to give them Diageo pirates 45% which makes me wonder what they asked for initially. We then had to match the percentage with our established Cruzan cash cow to 46%. Before the deal, we got almost $110 million from Cruzan. Last year, we got 47$ million from both rum companies combined. I thank VI Canuck for acknowledging that it is "a little expensive" but I think that is being kind. Let me tell you what else is wrong with the deal:
1. It violates the World Trade Organization rules for illegal subsidies. CARICOM is contesting the deal which may result in fines against the US and in turn the Virgin Islands and Puerto Rico. I sure congress is aware of the suit.
2. The Congress has now refused to pass the extension of the cover. Is it because they are sickened by the "heroic" deal that deJongh inked? We recently begged for and received an advance, which will be deducted next year if the extension remains blocked.
3. The deal requires the VI to buy the molasses for Diageo even for that rum which is sold internationally and for which we receive no cover over. Really?
4. The deal is only for rum that provides no packaging jobs. It is packaged in the states. 80 jobs? I thought it was forty.. But even so 80 jobs? After we built them a plant for $250 million and gave them $150 million in moving fees? At eighty jobs, we gave Diageo $500,000.00 for each job they gave us. That, my friend is more than a little expensive, and is hardly a deal.
5. The deal requires us to provide them all their advertising money and charitable donations- which they don't have to give to is.
6. This heroic deal deal netted us $47 million dollars from Cruzan and Diageo combined after we paid the bonds and returned the revenue to the companies. Did a pirate negotiate this deal?
7. Diageo has a liability for breeches of $25 million only.
8. They have a minimum annual requirement to make 2 million barrels only. Not the 20 million plant we have them free.
9. Diageo was fined tens of millions of dollars by the Securities and Exchange Commission for giving bribes in exchange for absurd tax breaks to local officials in India, Thailand, and, South Korea....

The "math" is clear?
One $110 million rum deal plus another gives us a NET revenue of $47 million. So 1 + 1 = <1/2. No wonder our governor graduated from high school the same year he turned 20 years old.

If you have different NET figure please, please correct me. Otherwise I we can agree to disagree on the "heroic" move of deJongh.

I can't argue your unsubstantiated data because I can't be bothered to research it but governments of all levels in all countries make similar deals to entice companies to relocate. The GVI will do the same again when the time comes for a buyer to step forward and re-start our refinery. That's the way the game is played, like it or not.

I'll play, with the first 4 points MJ made just to get started...

"1. It violates the World Trade Organization rules for illegal subsidies."

- Caricom may be contesting it but it has not been proven to be illegal yet, or that it violates any rules. The Rum Cover Over has been around a very long time - 78 years before the WTO was even formed (in 1995).

"2. The Congress has now refused to pass the extension of the cover. Is it because they are sickened by the "heroic" deal that deJongh inked? We recently begged for and received an advance, which will be deducted next year if the extension remains blocked."

- The Rum Cover Over (RCO) has been in place since roughly 1917. It was set up to enable fledgling industries in the territories to compete with mainland US spirit producing companies. The Rum Cover Over remains in place. What expired was the last extension to the cover agreement over that increased the amount per proof gallon from 10.50 to 13.25. The increase was put in place in 1999 and has been extended every year or two since. The extension is usually grouped in with a package of similar tax measures. The decision to include the extension is made in the house ways and means committee. The revision of the extension has not yet been proposed as part of any bill before Congress this year and therefore Congress has not yet been voted anything down, so they have not 'refused' to pass it. The more likely reason the package of tax reforms is not making it through committee is because 2014 is a mid-term election year. I think your incorrect in your assumption that this is because US Congressional body is sickened by DeJongh's dealings with Diageo.

3. The deal requires the VI to buy the molasses for Diageo even for that rum which is sold internationally and for which we receive no cover over. Really?

- I'm not aware of this. Do you have any facts to substantiate where Diageo's product is shipped when it leaves island? What % is shipped to the states versus directly international?

4. The deal is only for rum that provides no packaging jobs. It is packaged in the states. 80 jobs? I thought it was forty.. But even so 80 jobs? After we built them a plant for $250 million and gave them $150 million in moving fees? At eighty jobs, we gave Diageo $500,000.00 for each job they gave us. That, my friend is more than a little expensive, and is hardly a deal.

- This is where things start go off the rails. The statement is that we gave Diageo 500,000.00 per job * 80 jobs = 40 million dollars. But just above that it states $250mil + $150mil which would equal $400mil. Either way the difference is irrelevant as the foundation of the statement is incorrect. To my knowledge the VI Government never directly handed over 'gave' any money to Diageo. Bonds were floated to support construction and those bonds will be repaid using a portion of the RCO revenue. The VI government didn't just write a check and give Diageo $400 mill and to imply such is false. And the real employment figure is around 60 full time jobs.

I'll not bother addressing the rest of the statements, as to do so would likely only point out further inaccuracies.

And no - I don't work for Diageo, and don't have a dog in this fight in any way shape or form. I just like to see facts presented without bias so intelligent individuals can make up their own opinions instead of being spoon fed a bunch of codswallop.

Miss justice has some agenda, as reflected in previous posts. Wish I knew what it is.

Miss justice has some agenda, as reflected in previous posts. Wish I knew what it is.

Whatever it is I'd like to see it based on more factual information - Maybe a manifesto will be forthcoming?

Cool beans.
1. The World Trade Organization is clear about its rules "Subsidies and countervailing measures.." Please google [wto rules subsidies] to familiarize yourself with those rules to which the US is a signatory. Yes, there is a case with CARICOM. Which I implied has not yet been adjudicated, but after reading the rules you can comment on whether or not CARICOM has a case against the US because of the Diageo deal.
2. LindaJ, you have an agenda too? Mine is to see that we get deals that are actually beneficial to the people of the Virgin Islands.
What is yours?
3. Island Hops, do you have a copy of the deal? Please get one.
A. The molasses subsidy page 34 of the contract. Do you have a search engine? It is really hard to copy and paste on an iPhone.
Section 5.2.1(a) For each Fiscal Year covered by this Agreement, beginning with the Fiscal Year ending Seltember 30, 2012, the Molasses Subsidy Payment shall equal the amount to be laid to Diageo as an industry purchaser of molasses pursuant to the provisions of :3 of the Virgin Islands Code ~3036 (2007) which amount shall never be less than the difference between (a) 16 cents (u.S) per gallon of masses purchased by Diageo for use in the production of bulk rum at the Project and (2) the total cost per gallon of such molasses to Diageo.
Please use your search engine to confirm or call the governor's office at 340774-0001 to confirm.
B. Congress did not block the extension; you are right. They did not even dare to introduce it. I am on an iPhone and it was easier to type that than to text what I am saying now. The bottom line is we didn't get the extension and you didn't get the point. I welcome the technical clarification. You have confirmed the essence of my point.
C. I do not know know what percentage is shipped internationally. But that is not my point. We should not be obligated to pay for one drop of molasses for rum for which we get no cover over revenue. Under the current agreement, they can ship %100 of the rum they produce off island.
4. Whether we gave Diageo money directly or we floated bonds and indirectly paid some of the cover over to bond holders to pay for the building of the plant is still the same. Spare me.
5. I guess you are embarrassed to comment on the fact that in July of 2011 Diageo was found guilty of bribing local officials to get "expensive" tax breaks in three countries. Honest and curious readers please google (Diageo + SEC + fines +2011 bribes) and see what comes up. That should be manifesto enough.
6. I do favor tax breaks to stimulate business. But not if they are one sided and not if they actually leave us worse off financially. They don't even break even.
7. I am sure when you research you will will find that the deal is "cods wallop"; sometimes it is okay to admit when the emperor is naked.

The Diageo deal is a disaster for the US Virgin Islands for 60 years!

Here are the WTO rules by link. These rules were in place before 2008. The 5% Cruzan rum subsidy was never considered illegal in amount.

http://www.wto.org/english/docs_e/legal_e/24-scm.pdf

And here is the article about our good corporate citizen Diageo
http://www.telegraph.co.uk/finance/newsbysector/retailandconsumer/leisure/8667035/Diageo-pays-16m-to-settle-bribery-claims.html

And here is the Agreement for your perusal

http://www.governordejongh.com/cruzan/CRUZAN-Agreement.pdf

I rest my case.

Does anybody really care what the WTO thinks? They are as useless as the UN.

Now, let's get back to the topic - The rumor that Exxon will take over Hovensa in some way...

Does anybody really care what the WTO thinks? They are as useless as the UN.

Now, let's get back to the topic - The rumor that Exxon will take over Hovensa in some way...

I heard Exxon won it in some type of corporate high stakes poker game.

Does anybody really care what the WTO thinks? They are as useless as the UN.

Now, let's get back to the topic - The rumor that Exxon will take over Hovensa in some way...

Kindly "substantiate" the rumors if you can. Otherwise the bloggers that demanded it of me may demand it from you too if they are consistent, and don't have an "agenda". Exxon is publicly traded. The information should be easily available to find. I happen to be a shareholder of Exxon and I have yet to get such a big notice. I would in essence become part owner of Hovensa which is really cool, because my company just suckered the VI into letting us the Hess shareholders own a stand alone storage facility and pay half the tax liability.

Is there anyone who would like the link to the 4th Agreement too? Will anyone want to change that topic after they read it? Because whether Exxon acquires part of Hovensa or not, the contract does not require them to operate a refinery or to sell the plant to an entity that wants to. The new Exxon owners can operate a stand alone storage terminal thanks to the "heroic" deal making of our elected officials. LindaJ, we blame the senate if that is more palatable to you. They have, after all, voted up every one of these disastrous deJongh deals. A true heroic deal would feel really great right about now.

OK, we get it. You don't like DeJong.....jeez...

No. You don't get it. I don't like his rotten deals, so it's not personal. I care about the well being of the Virgin Islands. And Justice, of course. May she remind blind. I actually think he is a very likable guy. So I understand your defensiveness and confusion. Deep down we probably want the same things and it shouldn't matter who gives it to us.

And as justice should remain blind, the people should remain sighted when it comes to saying the Emperor is naked, even if we like the emperor.

Thanks for conceding.