Connect with us

Business

Exclusive: Caribbean refinery bidders face unknown environmental costs -U.S. EPA letter

Published

on

October 29, 2021

By Laura Sanicola

(Reuters) – Potential bidders for the bankrupt Limetree Bay refinery in the Virgin Islands may be on the hook for newly discovered groundwater contamination near the site and numerous other unspecified costs, according to a letter from environmental regulators reviewed by Reuters.

Limetree is scheduled to be auctioned next month. The St. Croix-based facility reopened earlier this year under new ownership after being shut for nearly decade, only to be shut down again by the U.S. Environmental Protection Agency after a series of emission releases.

Advertisement

In an informational letter to potential buyers dated Sept. 24 obtained by Reuters through an official records request, the EPA outlined several obligations that a prospective buyer may need to consider if they purchase the facility.

Some prospective investors have voiced concern that the EPA’s requirements will prolong the permitting process and dampen interest in a potential sale. Limetree filed for bankruptcy in July after private equity owners EIG and Arclight invested $4.1 billion in an unsuccessful revival of the facility.

Prospective buyer St. Croix Energy informed the EPA of a plan to restart, but placing a bid will be “incredibly difficult,” said Gregg Galardi, the lawyer representing the company, earlier this week. “The permitting process itself would be longer than anyone would expect.”

On Friday, Judge David Jones, chief judge of the U.S. Bankruptcy Court in the Southern District of Texas, granted Limetree an extension to assess potential bids.

The refiner wanted to restart the facility to produce 210,000 barrels a day of gasoline and other fuels. Its planned restart was delayed for more than a year, and it operated for only a few months before being shut down again after its stacks spewed oil on homes and contaminated drinking water.

Advertisement

Buyers might need to obtain additional permits if they want to modify or expand certain parts of the refinery in order to adhere to emission limits that constitute the “best available control technologies” for curbing pollution, the EPA said.

Limetree Bay’s former owner, Hovensa, stopped operating the facility in 2012 and declared bankruptcy in 2015.

The EPA also said Limetree and the refinery’s EPA-appointed Environmental Response Trust found new groundwater contamination originating after 2015. Contamination from Hovensa is being remediated by the trust but the new contamination is not covered by the existing hazardous waste (RCRA) permit, which means future owners would have to conduct remediation work to eliminate that problem, the EPA said.

The EPA also said audit reports from the refinery’s operations earlier this year showed compliance issues related to the Risk Management Plan (RPM) required under the Clean Air Act, in areas such as process safety, operating procedures and training.

“The recent release events at the refinery indicate a potential failure of one or more RPM elements,” which a new owner would be obligated to make sure the plant complied with, the EPA said.

Advertisement

The refinery’s assets could be liquidated with various components sold separately if a bidder is not named, Limetree’s counsel, Elizabeth Green, said earlier this week. If that happens, the U.S. Virgin Islands government, Limetree Bay Terminals and the U.S. EPA would be responsible for site cleanup.

(Reporting by Laura Sanicola in New York; Editing by Matthew Lewis)

Continue Reading
Advertisement

Business

Wood’s ARK fund fails to join broad market rally as lockdown stocks slip

Published

on

November 30, 2021

By David Randall

NEW YORK (Reuters) – The broad market relief rally on Monday left many so-called stay-at-home stocks behind, dealing another blow to Cathie Wood’s ARK Innovation fund.

The $18.6 billion ARK Innovation fund, which outperformed all other U.S.-based equity funds last year due to its outsized holdings of stocks that rallied during the economic lockdowns, dropped 0.5% in morning trading Monday, well behind the 1% gain in the S&P 500.

Advertisement

The benchmark index dropped nearly 2.3% Friday on news a new coronavirus variant, now known as Omicron, had been identified in southern Africa, spurring new travel restrictions worldwide. Yet global equity markets made up some of that lost ground Monday on reports the new variant may produce mild symptoms.

Signs Omicron will not deal a severe blow to the economy are prompting investors to remain in cyclical stocks, said Phil Orlando, chief equity market strategist at Federated Hermes.

“This is not February of 2020 when the world is about to shut down. If anything we think the economy will continue to improve from here,” he said.

ARK Innovation’s declines were widespread Monday, with 8 out of the fund’s 10 largest holdings down for the day. Telemedicine company Teladoc Health Inc, the fund’s second-largest holding, fell 5.1%, while streaming company Roku Inc shed 2.6% and Zoom Video Communications Inc lost 3.2%.

For the year, ARK Innovation is down 14%, while the benchmark S&P 500 is up 23.4%. That underperformance places ARK Innovation among the worst-performing mid-cap growth funds for the year to date, according to Morningstar. It remains among the top-performing funds over the last 5 years.

Advertisement

Ark did not respond to a request to comment for this story.

(Reporting by David Randall; Editing by Mark Porter)

Continue Reading

Business

Oil prices rise on bets OPEC+ will hold off output hike

Published

on

November 30, 2021

By Sonali Paul

MELBOURNE (Reuters) – Oil prices climbed on Tuesday, extending a rebound from last week’s plunge on growing expectations major producers would pause plans to add crude supply in January amid uncertainty over the severity of the Omicron coronavirus variant.

U.S. West Texas Intermediate (WTI) crude futures jumped 99 cents, or 1.4%, to $70.94 a barrel at 0105 GMT, adding to a 2.6% rise on Monday.

Advertisement

Brent crude futures climbed 82 cents, or 1.1%, to $74.26 a barrel, after gaining 1% on Monday.

Oil plunged around 12% on Friday along with other markets on fears the heavily mutated Omicron would spark fresh lockdowns and dent global growth.

The World Health Organization said on Monday Omicron posed a very high risk of infection surges, and several countries stepped up travel curbs. It is still unclear how severe the new variant is and whether it can resist existing vaccines.

With the demand outlook under a cloud, expectations are growing that the Organization of the Petroleum Exporting countries, Russia and their allies, together called OPEC+, due to meet on Dec. 2 will put on hold plans to add 400,000 barrels per day (bpd) of supply in January.

“We think the group will lean towards pausing output hikes in light of the Omicron variant and the oil stockpile release by major oil consumers,” Commonwealth Bank commodities analyst Vivek Dhar said in a note.

Advertisement

Pressure was already growing within OPEC+ to reconsider its supply plan after last week’s release of emergency crude reserves by the United States and other major oil-consuming nations to address soaring prices.

“Following the global strategic reserve releases and the announcement of dozens of countries restricting travel to and from South Africa and neighbouring nations, OPEC and its allies can easily justify an output halt or even a slight cut in production,” OANDA analyst Edward Moya said in a note.

Also weighing on the market is the prospect of a resumption of oil exports from Iran, following upbeat comments from diplomats as talks resumed on Monday between world powers and Iran on reviving a nuclear pact.

(Reporting by Sonali Paul. Editing by Gerry Doyle)

Advertisement
Continue Reading

Business

Main IKEA retailer’s profits jump despite ‘unprecedented challenges’

Published

on

November 30, 2021

By Anna Ringstrom

STOCKHOLM (Reuters) – Ingka Group, the owner of most IKEA stores world-wide, reported on Tuesday a jump in annual profit on the back of record demand for home furnishing as people stay at home more due to the pandemic.

Despite more temporary store closures due to pandemic related restrictions than the year before, and product shortages due to the global supply chain crisis, operating profit in the 12 months through August was up 31% at 1.9 billion euros. Sales were up 6%, to above pre-pandemic levels, with online sales jumping to account for 30% of total sales, against 18% the year before.

Advertisement

Compared to the pre-pandemic fiscal 2019, profit was still down, by 8%, due to high investment levels. Capital expenditure was up 52% on the year, at 3.2 billion euros, as Ingka accelerated investments in digitalisation, new inner-city store formats, existing stores, and distribution and delivery networks.

Chief Financial Officer Juvencio Maeztu told Reuters he expected sales to grow also in the current fiscal year, and profits to be at least as high as in the past year. Investment levels would probably remain at least as high as in the past year, he said.

“Our journey to create a better IKEA forges ahead in a world that faces unprecedented challenges. COVID-19 will continue to impact our business and the communities we are a part of,” the company said in a statement.

“The global supply and transport crisis will require a resilient, flexible response. Efforts across the value chain will continue to mitigate the challenges with product availability, inflation, prices of raw materials and transport that are expected to continue into FY22.”

Budget furniture brand IKEA operates through a franchise system, with Ingka the main franchisee to brand owner Inter IKEA with 392 stores including city stores, and 73 smaller store formats.

Advertisement

Inter IKEA, which is in charge of design and supply, in the past year absorbed substantially higher costs for raw materials and transports, but has flagged it will raise prices to its retailers this year in the face of continued high supply related costs.

Ingka’s Maeztu said in the interview that he could not rule out that Ingka would also raise prices this year.

(Reporting by Anna Ringstrom; editing by Richard Pullin)

Advertisement
Continue Reading
Advertisement

Trending