By Alison Sider 

The mothballed refinery on St. Croix will stay closed after the U.S. Virgin Island's Legislature voted overwhelmingly against letting a new owner take over the plant.

Atlantic Basin Refining Inc. hoped to revive the refinery, saying it could run the plant efficiently on light, sweet oil pumped in the U.S. The refinery was closed in 2012 by its current owner, Hovensa LLC, which used it to turn heavy crude-oil from Venezuela into gasoline, diesel and other fuels.

Atlantic Basin reached an agreement earlier this fall to buy Hovensa, a joint venture company between Hess Corp. of New York and Petroleos de Venezuela, the national oil company of Venezuela. But closing the deal hinged on the island government's approval to extend a special tax treatment for the plant. On Friday in a 13-2 vote, the U.S. Virgin Island Legislature said no to the deal.

Senators voiced worries on Friday that changing ownership might release Hovensa from any obligations to the government and make it harder to resolve an ongoing tax dispute with the company. They also expressed doubts that Atlantic Basin, a newly formed company, would be able to raise enough money to restart the refinery, which at one time was the largest private employer on the island. Atlantic Basin estimated it would cost roughly $1.2 billion to revamp the plant, and said several Asian banks, private equity groups and individual investors were interested in funding the project.

"I cannot choose it because I do not believe it would be in the best interest of this place," said Sen. Tregenza Roach said before the vote.

Sen. Judi Buckley, one of two lawmakers who voted in favor of Atlantic Basin, said the deal wasn't perfect but ultimately was in the best interest of the island's economy.

"So far, no one has mentioned what Plan B is," she said. "There's nothing else on the table."

Robert Moore, chief executive of Atlantic Basin, said in an interview last week that his company would walk away from the deal if Legislature didn't give its stamp of approval.

"If this is not ratified then Hovensa will shut their doors and go out of business. We will leave as well," he said. "Once they shut their doors, their refinery permits will be gone. By then it will be too long and it will be over."

Mr. Moore didn't respond to a request for comment Friday.

Even though the St. Croix refinery hasn't produced fuel since 2012, the site has been operating as a fuel import and storage terminal for the island. Without a sale to Atlantic Basin, the company doesn't have enough cash to continue operating and the terminal will be shut down, Hovensa General Manager Sloan Schoyer told lawmakers at a hearing earlier this week.

The company informed its customers last month that it had stopped importing fuel to the island and expects to run out of gasoline by early January and will be out of diesel by mid-February.

George Dudley, an attorney for Hovensa, said he couldn't comment on the company's future.