The St. Croix refinery in the US Virgin Islands, which went from being the world’s largest to being closed, is poised to see new life, capitalizing on the US shale boom that has boosted oil supply in the region.

Atlantic Basin Refining agreed to buy Hovensa, according to a statement from Atlantic Basin issued by FTI Consulting. Hovensa’s refinery, which was shut down and converted into an oil storage terminal in February 2012, will process about 300,000 bpd of light oil when it reopens.

It will take as long as two years to start the refinery, the Virgin Islands government said in a statement. Hovensa’s return will add an oil buyer to a market where crude prices have fallen 25% in the past four months because of growing supply and weaker global demand. It may also bring more gasoline to the US East Coast, helping to reduce fuel prices for American drivers.

“The US shale revolution has created an abundant supply of US light sweet crude and there is currently a limited ability to process this type of feedstock at US refineries,” said Mark W. Eckard, Atlantic Basin’s managing director for legal and governmental affairs.

Hess Corp. built the refinery in 1966 and formed a joint venture with Petroleos de Venezuela SA in 1998 to create Hovensa. Hess expanded the plant to 650,000 bpd in 1974, making it the largest in the world. Operators reduced capacity in the years before shuttering it as the economic slowdown that began in 2007 reduced global fuel demand.

Hess spokespeople could not immediately be reached for comment this morning. A PDVSA media official, who is not an authorized spokesperson, declined to comment when questioned about the refinerydivestment.

Losses at the refinery totaled $1.3 billion in the three years before it was closed, Hovensa said in a statement at the time. The plant burned oil products to generate heat and steam, putting it at a disadvantage to US Gulf Coast refineries that used cheaper natural gas from domestic shale formations.

St. Croix provided 83,000 bpd of gasoline and 47,000 bbl of distillate to the US Northeast before closing, according to the Energy Department. The refinery will be positioned to supply refined products to the US East Coast, the Caribbean, South America and other markets, Eckard said.

Retail gasoline prices across the US could fall when the refinery restarts, because they are based on futures contracts that hinge on supplies in the New York Harbor.

“It would certainly add some downward pressure,” said Patrick DeHaan, a Chicago-based senior petroleum analyst for GasBuddy Organization.

Atlantic Basin was formed by a group of energy industry veterans for the purpose of acquiring the refinery, the statement showed. The company has reached an agreement with Hovensa and expects to sign one with US Virgin Islands Gov. John de Jongh Jr. this week, Eckard said. The deal will need to be ratified by the Legislature of the territory.

The islands will ultimately gain more than $100 million in annual tax revenues from the refinery, Atlantic Basin said.

The US Virgin Islands, which were purchased from Denmark for $25 million in gold in 1917, lie east of Puerto Rico and form part of the same archipelago as the British Virgin Islands. The islands, which include St. Croix, St. Thomas and St. John, are a US territory and its 106,000 residents, who elect a governor and a 15-member senate, are US citizens.