Professor Eric Smith’s Energy Markets, Institutions, and Policy class had the pleasure of hosting Larry Ornstein, former Senior Vice President and CFO of the Refining & Marketing division at Hess Corporation.
Mr. Ornstein’s presentation was titled “Evolution of a Joint Venture” where he detailed the story of the Hess refinery on the island of St. Croix.
The refinery on St. Croix was built in the 1960’s in a project spearheaded by Leon Hess, the founder of Hess Corp. The refinery was expanded in 1974 to bring its capacity to 650,000 barrels/day, making it the largest refinery in the world at that time.
Later on, Hess would enter into a joint venture with Petroleos de Venezuela (PDVSA), the national oil company of Venezuela, where PDVSA paid $625 million for a 50% stake in the refinery to create a new company, HOVENSA.
More recently, in 2012, the decision was made to close down the refinery and turn it into a storage terminal; HOVENSA already had a storage capacity of 30 million barrels.
Just a few days ago on September 14, 2015, the U.S. Virgin Islands announced they were suing Hess for $1.5 billion, alleging that Hess broke the law by shutting down the refinery when it had agreed to continue operations through 2022.
There is little doubt that it will be many years before anything is resolved between the two parties.
In his closing remarks, Mr. Ornstein left the students with the following advice:
Be a leader, not a follower
Don’t blend into the woodwork
Think strategically
Start building a good resume early
Create lasting legacy; be able to say “I had a part in that”
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