| 10. | HOVENSA L.L.C. Joint Venture |
Hess Oil Virgin Islands Corp., a subsidiary of the Corporation, has a 50% interest in HOVENSA, a joint venture with a subsidiary of PDVSA, which owns a refinery in St. Croix, U.S. Virgin Islands. In January 2012, HOVENSA shut down its refinery and continued operating solely as an oil storage terminal. In 2013, HOVENSA and the Government of the Virgin Islands agreed to a plan to pursue a sale of HOVENSA and the sales process commenced in the fourth quarter. If an agreement to sell the refinery cannot be reached, HOVENSA will likely not be able to continue operating as an oil storage terminal.
In 2011 the Corporation recorded a total of $1,073 million of losses from its equity investment in HOVENSA, which included $875 million ($525 million after income taxes) related to an impairment recorded by HOVENSA and other charges associated with its decision to shut down the refinery. The Corporation’s share of the impairment related losses recorded by HOVENSA represented an amount equivalent to the Corporation’s financial support to HOVENSA at December 31, 2011, its planned future funding commitments for costs related to the refinery shutdown, and a charge of $135 million for the write-off of related assets held by the subsidiary which owns the Corporation’s investment in HOVENSA.
The Corporation’s investment in HOVENSA is accounted for using the equity method. In accordance with Rule 3-09 of Regulation S-X, the Corporation has filed financial statements for HOVENSA in this report on Form 10-K.