Pursuant to Rule 424(b)(2)
File No. 333-72317

PROSPECTUS

7,600,000 SHARES
[LOGO]
STATIA TERMINALS GROUP N.V.
COMMON SHARES

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STATIA TERMINALS GROUP N.V. IS OFFERING 7,600,000 COMMON SHARES. THIS IS OUR
INITIAL PUBLIC OFFERING AND NO PUBLIC MARKET CURRENTLY EXISTS FOR OUR COMMON
SHARES.

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THE COMMON SHARES HAVE BEEN CONDITIONALLY APPROVED FOR LISTING ON THE NASDAQ
NATIONAL MARKET UNDER THE SYMBOL "STNV", SUBJECT TO OFFICIAL NOTICE OF ISSUANCE.

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INVESTING IN THE COMMON SHARES INVOLVES RISKS. SEE "RISK FACTORS" BEGINNING ON
PAGE 8.

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PRICE $20.00 A SHARE

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UNDERWRITING
PRICE TO DISCOUNTS AND PROCEEDS TO
PUBLIC COMMISSIONS COMPANY
-------------- ------------- -------------

Per Common Share.................. $20.00 $1.30 $18.70
Total............................. $152,000,000 $9,880,000 $142,120,000

The Securities and Exchange Commission and state securities regulators have not
approved or disapproved these securities, or determined if this prospectus is
truthful or complete. Any representation to the contrary is a criminal offense.

Statia Terminals Group N.V. has granted the underwriters the right to purchase
up to an additional 760,000 common shares to cover over-allotments.

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JOINT BOOKRUNNING MANAGERS

BEAR, STEARNS & CO. INC. MORGAN STANLEY DEAN WITTER

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PRUDENTIAL SECURITIES DAIN RAUSCHER WESSELS
A DIVISION OF DAIN RAUSCHER
INCORPORATED

April 23, 1999

[LOGO]
[MAP APPEARS HERE]

o Statia Terminal Facility
- --- Major Shipping Leases to St. Eustatiuss
- -- Major Shipping Leases to Point Tupper

You should rely only on the information contained in this prospectus. We
have not authorized anyone to provide you with information different from that
contained in this prospectus. We are offering to sell, and seeking offers to
buy, common shares only in jurisdictions where offers and sales are permitted.
The information contained in this prospectus is accurate only as of the date of
this prospectus, regardless of the time of delivery of this prospectus or of any
sale of the common shares.

Until May 18, 1999 (25 days after the date of this prospectus), all dealers
that buy, sell or trade in our common shares, whether or not participating in
this offering, may be required to deliver a prospectus. This delivery
requirement is in addition to the dealers' obligation to deliver a prospectus
when acting as underwriters and with respect to their unsold allotments or
subscriptions.

The underwriters expect the common shares will be ready for delivery in New
York, New York on or about April 28, 1999.

TABLE OF CONTENTS

PAGE
------

Prospectus Summary....................................................................................... 1
Statia Terminals Group N.V............................................................................. 1
Business Strategy...................................................................................... 2
The Offering........................................................................................... 3
Summary Historical and Pro Forma Consolidated Financial Data........................................... 5
Recent Developments.................................................................................... 6
Forward-Looking Statements............................................................................. 7
Risk Factors............................................................................................. 8
Risks Inherent in the Common Shares.................................................................... 8
Risks Inherent in Our Business......................................................................... 13
The Restructuring........................................................................................ 16
Use of Proceeds.......................................................................................... 17
Capitalization........................................................................................... 18
Dilution................................................................................................. 19
Cash Distribution Policy................................................................................. 20
Quarterly Distributions of Available Cash.............................................................. 20
Distributions from Operating Surplus During Subordination Period....................................... 20
Distributions from Operating Surplus After Subordination Period........................................ 21
Operating Surplus and Interim Capital Transactions..................................................... 21
Restrictions on Distributions of Available Cash........................................................ 22
Subordination Period; Conversion of Subordinated Shares................................................ 22
Deferral of Distributions on Subordinated Shares....................................................... 23
Incentive Distributions................................................................................ 24
Distributions from Interim Capital Transactions........................................................ 24
Adjustment of Target Quarterly Distribution and Additional Distribution Levels......................... 25
Distribution of Cash upon Liquidation.................................................................. 25
Restrictions on Distributions............................................................................ 27
Restrictions Imposed by Netherlands Antilles Law....................................................... 27
Restrictions Imposed by Indenture...................................................................... 27
Unaudited Pro Forma Consolidated Condensed Financial Statements.......................................... 29
Selected Consolidated Financial Data..................................................................... 33
Management's Discussion and Analysis of Financial Condition and Results of Operations.................... 35
Overview of Operations................................................................................. 35
Results of Operations.................................................................................. 37
Year Ended December 31, 1998 Compared with Year Ended December 31, 1997................................ 38
Year Ended December 31, 1997 Compared with Year Ended December 31, 1996................................ 39
Selected Quarterly Financial Information............................................................... 40
Liquidity and Capital Resources--Subsequent to the Castle Harlan Acquisition........................... 41
Liquidity and Capital Resources--Prior to the Castle Harlan Acquisition................................ 42
Capital Expenditures................................................................................... 42
Environmental, Health and Safety Matters............................................................... 43
Information Technology and the Year 2000............................................................... 45
Political, Inflation, Currency and Interest Rate Risks................................................. 46
Tax Matters............................................................................................ 46
Legal Proceedings...................................................................................... 46
Insurance.............................................................................................. 47
Accounting Standards and Policies...................................................................... 47
Other Matters.......................................................................................... 47
Quantitative and Qualitative Disclosures About Market Risk............................................. 48
Industry................................................................................................. 49
Terminaling............................................................................................ 49
Bulk Cargo Movement.................................................................................... 50
Blending............................................................................................... 51
Processing............................................................................................. 51
Seasonal and Opportunity Storage....................................................................... 51

PAGE
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Bunker Sales........................................................................................... 52
Business................................................................................................. 54
Introduction and History............................................................................... 54
Competitive Strengths.................................................................................. 55
Business Strategy...................................................................................... 56
Services and Products.................................................................................. 57
Pricing................................................................................................ 58
Information by Location................................................................................ 59
Competition............................................................................................ 62
Customers.............................................................................................. 63
Suppliers.............................................................................................. 64
Environmental, Health and Safety Matters............................................................... 64
Employees.............................................................................................. 65
Legal Proceedings...................................................................................... 66
Insurance.............................................................................................. 66
Management............................................................................................... 67
Directors and Executive Officers....................................................................... 67
Executive Compensation................................................................................. 70
Old Stock Option Plan.................................................................................. 73
New Share Option Plan.................................................................................. 73
Stockholder Loans...................................................................................... 73
Employment Agreements.................................................................................. 74
Special Management Bonus............................................................................... 74
Security Ownership....................................................................................... 75
Certain Relationships and Related Transactions........................................................... 76
Sale of Brownsville Terminal........................................................................... 76
Management Agreement................................................................................... 76
Consulting Agreement................................................................................... 76
Stockholders' Agreements............................................................................... 76
Loans to Management.................................................................................... 76
Board of Directors..................................................................................... 77
Description of Common Shares............................................................................. 78
General................................................................................................ 78
Distributions and Distributions Upon Liquidation....................................................... 78
Voting Rights.......................................................................................... 78
Issuance of Additional Shares.......................................................................... 79
Transfer Agent and Registrar........................................................................... 79
Restrictions on Ownership and Transfer................................................................. 79
Description of the Subordinated Shares................................................................... 82
Conversion of Subordinated Shares...................................................................... 82
Distributions upon Liquidation......................................................................... 82
Shares Eligible for Future Sale.......................................................................... 83
Taxation................................................................................................. 84
Netherlands Antilles Taxation.......................................................................... 84
U.S. Federal Income Taxation........................................................................... 84
Plan of Distribution..................................................................................... 88
Experts.................................................................................................. 90
Legal Matters............................................................................................ 90
Enforceability of Certain Civil Liabilities.............................................................. 90
Available Information.................................................................................... 90
Glossary of Offering Terms............................................................................... A-1
Pro Forma Available Cash from Operating Surplus.......................................................... B-1
Index to Financial Statements............................................................................ F-1

PROSPECTUS SUMMARY

This summary highlights information contained elsewhere in this prospectus.
This summary does not contain all of the information that you should consider
before investing in the common shares. You should read the entire prospectus
carefully, including the financial statements and the notes to those statements.

The following should help you understand some of the conventions and
defined terms used throughout this prospectus:

o Frequently in this prospectus, we refer to ourselves, Statia Terminals
Group N.V., as "we" or "us." Generally we refer to ourselves as "we" or
"us" when discussing our operations. As the context requires, references
to "we" and "us" include all of our subsidiaries, including Statia
Terminals International N.V.

o For ease of reference, a glossary of terms used in this prospectus and
useful in understanding the common shares we are offering in this
prospectus is included as Appendix A to this prospectus.

o Unless we state otherwise, the information in this prospectus assumes
that the underwriters' over-allotment option is not exercised.

o Unless we state otherwise, all references in this prospectus to "$" or
"dollars" are to United States dollars.

STATIA TERMINALS GROUP N.V.

We believe we are one of the five largest independent marine terminaling
companies in the world as measured in terms of storage capacity. We believe we
are the largest independent marine terminal operator handling crude oil imported
into the Eastern U.S. Our two terminals are strategically located at points of
minimal deviation from major shipping routes. We provide services to many of the
world's largest producers of crude oil, integrated oil companies, oil traders,
refiners, petrochemical companies and ship owners. These customers include Saudi
Aramco and Tosco. Our customers transfer their products to our facilities for
subsequent transfer to vessels destined for the Americas and Europe in a process
known as "transshipment."

We own and operate a facility on the island of St. Eustatius, Netherlands
Antilles, and a facility at Point Tupper, Nova Scotia, Canada. At Point Tupper,
we operate the deepest independent ice-free marine terminal on the North
American Atlantic coast. Both of our facilities can accommodate substantially
all of the world's largest fully-laden very-large and ultra-large crude
carriers. Our facilities are qualified to allow us and our customers to
transship products to other destinations with minimal Netherlands Antilles or
Canadian tax effects. In addition to storage, we also provide related services,
including supplying fuel to marine vessels for their own engines in a process
known as "bunkering," crude oil and petroleum product blending and processing,
and emergency and spill response.

We have built or renovated 80% of our tank capacity and related facilities
over the last eight years. Since 1990, we have tripled our storage capacity at
St. Eustatius and added an offshore single point mooring buoy with loading and
unloading capabilities. During the period from 1992 through 1994, we converted
and renovated a former refinery site into an independent storage terminal at
Point Tupper. At the end of 1998, our tank capacity was 18.7 million barrels.

Our earnings before interest expense, income taxes, depreciation and
amortization have increased from $20.3 million in 1996 to $30.1 million in 1998.
During 1996, 1997 and 1998, our cash flows from operations were $11.3 million,
$9.8 million and $18.2 million, respectively. During these same years we
experienced net losses of $3.2 million, $8.4 million and $1.5 million,
respectively. However, on a pro forma basis for 1998 our earnings before
interest expense, income taxes, depreciation and amortization and our net income
were $32.9 million and $9.7 million, respectively. Earnings before interest
expense, income taxes, depreciation and amortization is presented to provide
additional information related to our ability to service debts and is not an
alternative measure of operating results or cash flow from operations.

The marine petroleum terminaling industry is primarily engaged in bulk
storage and transshipment of crude oil and petroleum products. Demand for our
terminaling services depends on the amount of crude oil and petroleum products
imported into the U.S. The U.S. Department of Energy projects that the import
requirements of crude oil and refined petroleum products into the U.S. will
increase at an annual compounded rate of 4.3% from 1998 through 2003.

Due to significant economies of scale, crude oil is shipped from the Middle
East, North Sea and West Africa in very-large and ultra-large crude carriers.
These vessels, however, are too large to deliver their cargo directly to many
ports, including virtually all U.S. ports. Therefore, most petroleum companies
shipping by these vessels transfer their liquid cargo to smaller vessels,
usually while at sea, a process known as "lightering," or transship their cargo
through a terminal to other smaller vessels. While the direct costs of
transshipment service provided by terminals is typically more expensive than
lightering, terminals offer several advantages over lightering, such as:

o reduced risk of environmental damage,
o less dependence on weather conditions,
o increased scheduling certainty,
o ability to access value-added terminal services, and
o ability to store products close to the market.

Since November 1996, Castle Harlan Partners II L.P. and some of its
affiliates have owned the majority of our outstanding voting shares.

Our principal executive offices are located at Tumbledown Dick Bay, St.
Eustatius, Netherlands Antilles, and our telephone number is (011) 5993-82300.

BUSINESS STRATEGY

Our business strategy is to manage our operations so we can generate stable
cash flow and make the target quarterly distribution on all of the common and
subordinated shares and to increase our asset values. We intend to pursue this
strategy by:

o Developing Strategic Relationships. To maximize recurring revenues
generated by charges for storage and based on the flow, or throughput, of
product, we generally target customers who have a continuing need to store crude
oil and petroleum products to supply a specific demand, such as a refinery or
other downstream distribution to consumers.

o Emphasizing Customer Confidentiality. In contrast to many of our
competitors, we do not compete with our customers in the business of trading
crude oil and petroleum products. We believe that, in general, our customers
prefer to do business with providers of services who are not competitors in
order to maintain the confidentiality of important business data.

o Capitalizing on a Wide Range of Value-Added Services. We seek to further
differentiate ourselves from our competitors and to increase revenues through
our comprehensive range of terminaling-related services which include:

o bunkering,
o crude oil and petroleum product blending and processing,
o bulk product sales, and
o various ship services.

o Developing Opportunities at our Point Tupper Facility. We are seeking to
attract additional business from customers in the North Sea and from the
emerging production areas located in Eastern Canada. Due to this initiative, we
plan to build new storage facilities at Point Tupper as the demand increases.

o Expanding Our Bunkering Operations. We seek to expand our business in
Eastern Canada by capitalizing on our reputation for consistently maintaining a
supply of quality marine fuels and lubricants for delivery to bunkering
customers.

o Strategic Acquisitions. From time to time we will consider opportunities
to acquire other marine terminals and related businesses.

Industry conditions and competition may make it difficult for us to
implement our business strategy. Even if industry conditions and competition
permit us to pursue expansion at our Point Tupper facility or of our bunkering
operations, those improvements could require substantial additional financing
that may not be available on acceptable terms or at all.

THE OFFERING

Securities that we are offering you....... 7,600,000 common shares

Shares to be outstanding after this
offering................................ 7,600,000 common shares and 3,800,000 subordinated shares. In
addition, 38,000 incentive rights will be outstanding.

Distributions of available cash........... o Common shares are entitled, to the extent there is sufficient
available cash, to a target quarterly distribution of $0.45 per
share, or $1.80 per share on a yearly basis, before we make any
distributions on subordinated shares.

o "Available cash" for any quarter will consist generally of all cash
on hand at the end of that quarter, as adjusted for reserves. We
have discretion in establishing reserves. Further, Netherlands
Antilles law as well as our debt instruments may limit the amount
of available cash.

o In general we will make distributions of available cash, if any, in
the following priorities:

First, to the common shares until each has received $0.45 per
quarter plus any arrearages from prior quarters.

Second, to the subordinated shares until each has received $0.45
per quarter. Subordinated shares do not accrue distribution
arrearages.

o We will adjust the target quarterly distribution for the period
from the closing of this offering through June 30, 1999 based on
the actual length of that period.

o We cannot assure you that we will be able to pay the target
quarterly distribution. The historical and pro forma cash generated
during 1998 would not have been sufficient to pay the target
quarterly distribution during each quarter of 1998 on the number of
common and subordinated shares that will be outstanding following
this offering. On a pro forma basis, available cash generated in
1998 would have resulted in an aggregate distribution to the common
shares of approximately $12.2 million, or $1.60 per common share,
for all four quarters and no distributions on the subordinated
shares. See Appendix B "Pro Forma Available Cash From Operating
Surplus" for the calculation of pro forma available cash from
operating surplus.

Deferral of distributions on subordinated
shares.................................. We will defer making the first $6.8 million of distributions that
would have otherwise been made on the subordinated shares until we
meet financial tests. This $6.8 million amount is equal to one year
of target quarterly distributions on the subordinated shares.

Timing of distributions................... In general, we will distribute available cash, if any, approximately
45 days after each March 31, June 30, September 30 and December 31 to
the holders of common and subordinated shares and incentive rights on
the applicable record date.

Incentive distributions................... If we make quarterly distributions of available cash to the common
and subordinated shares above specified additional distribution
levels, the holders of incentive rights will receive

distributions that represent an increasing percentage of the total
distributions we distribute above those specified distribution
levels.

Subordination period...................... o The subordination period will generally end once we meet financial
tests, but it cannot end prior to June 30, 2004. Generally, these
tests will be satisfied when we have earned and made the target
quarterly distribution on all shares for each of the three
preceding consecutive non-overlapping four-quarter periods.

o When the subordination period ends, all subordinated shares will
convert into common shares on a one-for-one basis and will then
participate equally with the other common shares, subject to the
distribution rights of incentive rights, in future distributions of
available cash. The common shares will then no longer accrue
distribution arrearages.

Early conversion of subordinated
shares.................................. o If we satisfy the tests for ending the subordination period for any
quarter ending on or after June 30, 2002, one-quarter of the
subordinated shares will convert into common shares.

o If we satisfy these tests for any quarter ending on or after
June 30, 2003, an additional one-quarter of the subordinated shares
will convert into common shares. The early conversion of this
second one-quarter of the subordinated shares may not occur until
at least one year following the early conversion of the first
one-quarter of the subordinated shares.

Restrictions on ownership
and transfer............................ The articles of Statia Terminals Group provide that any sale or other
disposition of common shares that would result in any person or group
owning or being considered to own more than 9.9% of the combined
voting power of all of our classes of voting stock will be either
null and void or prohibited to the extent that the sale or
disposition causes ownership in excess of that 9.9% limit. These
restrictions do not apply to the conversion of subordinated shares
into common shares, any subsequent transfer of the common shares
resulting from such conversion or the acquisition of any common
shares pursuant to the exercise of compensatory stock options or to
any of our employee benefit plans or any subsequent transfer of those
shares.

Use of proceeds........................... The net proceeds we will receive from the sale of common shares
offered through this prospectus will be approximately $142.1 million,
after deducting underwriting discounts and commissions, but before
deducting fees and expenses incurred in connection with this
offering. We anticipate using the net proceeds of this offering and
other cash on hand to:

o redeem all our Series A Preferred Stock, Series B Preferred Stock,
Series C Preferred Stock, Series D Preferred Stock and Series E
Preferred Stock; and

o purchase additional capital stock of Statia Terminals
International, which will use the proceeds to redeem or acquire 25%
of its mortgage notes.

SUMMARY HISTORICAL AND PRO FORMA CONSOLIDATED FINANCIAL DATA

The following table sets forth summary financial data for the periods and
as of the dates indicated. In January 1996, our former parent, CBI Industries,
Inc., was acquired by Praxair, Inc. The statement of operations data for each
of:

o the period from January 1, 1996 through November 27, 1996,
o the period from November 27, 1996 through December 31, 1996, and
o the years ended December 31, 1997 and 1998

have been derived from, and are qualified by reference to, our audited
consolidated financial statements included elsewhere in this prospectus. The
summary unaudited pro forma financial information is presented for illustrative
purposes only to illustrate the effects of:

o the disposition of Statia Terminals Southwest, Inc.,
o this offering, and
o the restructuring.

The summary unaudited pro forma financial information is not necessarily
indicative of future operating results or financial position. The summary
historical consolidated financial data set forth below should be read in
conjunction with, and is qualified by reference to, "Management's Discussion and
Analysis of Financial Condition and Results of Operations" and "Unaudited Pro
Forma Consolidated Condensed Financial Statements" and our consolidated
financial statements and accompanying notes thereto and other financial
information included elsewhere in this prospectus. Our historical capital
structure is not comparable to the pro forma capital structure. Pro forma net
cash flow information is not required in this prospectus. Therefore, historical
earnings per share data and pro forma cash flow information are considered not
applicable and are not presented. For an explanation of "not meaningful,"
EBITDA, and a description of the consolidated fixed charge coverage ratio, see
"Selected Consolidated Financial Data."

(DOLLARS IN THOUSANDS EXCEPT SHARE AMOUNTS)
PRE-CASTLE HARLAN
ACQUISITION POST-CASTLE HARLAN ACQUISITION
------------------ --------------------------------------------------------------------
JANUARY 1, 1996 YEAR ENDED DECEMBER 31,
THROUGH NOVEMBER 27, 1996 -------------------------------------------------
NOVEMBER 27, THROUGH PRO FORMA
1996 DECEMBER 31, 1996 1997 1998 1998
------------------ ----------------- ------------- ----------- -----------
(UNAUDITED)
STATEMENT OF OPERATIONS DATA:

Revenues......................... $ 140,998 $ 14,956 $ 142,499 $ 136,762 $ 135,149
Cost of services and products
sold........................... 129,915 12,803 122,939 106,688 105,014
Gross profit..................... 11,083 2,153 19,560 30,074 30,135
Administrative expenses.......... 8,282 664 7,735 9,500 8,150
Operating income................. 2,801 1,489 11,825 20,574 21,985
Loss (gain) on disposition of
property and equipment......... (68) -- (109) 1,652 --
Interest expense................. 4,187 1,613 16,874 16,851 12,651
Provision for income taxes....... 629 132 780 320 320
Net income (loss) available to
holders of common equity....... (2,682) (522) (8,361) (1,503) 9,698
Pro forma diluted earnings per
common and subordinated share
and incentive rights........... N/A N/A N/A N/A 0.85
Weighted average shares
outstanding in computing pro
forma diluted earnings per
share.......................... N/A N/A N/A N/A 11,438,000
BALANCE SHEET DATA:
Total assets..................... N/M 260,797 246,479 245,610 238,812
Long-term debt................... N/M 135,000 135,000 135,000 101,250
Redeemable Preferred Stock Series
A through C.................... N/M 40,000 40,000 40,000 --
Preferred Stock Series D and E... N/M 61,000 61,000 54,824 --
Total stockholders' equity....... N/M 58,982 50,621 43,331 118,230
NET CASH FLOW FROM (USED BY):
Operating activities............. 9,108 2,235 9,770 18,190 N/A
Investing activities............. (102,890) (178,033) (12,935) (4,092) N/A
Financial activities............. 92,998 185,076 -- (6,150) N/A
OPERATING DATA:
EBITDA........................... 17,882 2,452 22,489 30,116 32,882
Consolidated fixed charge
coverage ratio................. -- 1.7x 1.5x 2.0x 2.7x
Maintenance capital
expenditures................... 12,887 1,203 4,401 9,000 8,906
Capacity (in thousands of
barrels)....................... 20,387 20,387 20,387 19,556 N/A
Percentage capacity leased....... 68% 74% 70% 91% N/A
Throughput (in thousands of
barrels)....................... 81,994 13,223 118,275 119,502 N/A
Vessel calls..................... 922 108 1,030 1,027 N/A
N/A - not applicable
N/M - not meaningful

RECENT DEVELOPMENTS

RESULTS OF OPERATIONS FOR THE QUARTER ENDED MARCH 31, 1999

As shown in the following table, based on the results of operations for
January and February 1999 and the preliminary results of operations for March
1999, we anticipate revenues of $37.4 million; operating income of
$4.3 million; a net loss of $1.7 million; earnings before interest expense,
income taxes, depreciation and amortization of $7.3 million; and cash flow from
operations of $9.0 million for the three months ended March 31, 1999. On a
preliminary basis, we expect operating income for the first quarter of 1999 to
be 44% above operating income of $3.0 million earned for the first quarter of
1998. We expect our net loss for the first quarter of 1999 to be 26% less than
our $2.2 million net loss for the first quarter of 1998. We expect earnings
before interest expense, income taxes, depreciation and amortization for the
first quarter of 1999 to be 25% above earnings before interest expense, income
taxes, depreciation and amortization of $5.8 million earned for the first
quarter of 1998. These increases are due primarily to higher terminaling
services revenue resulting in part from additional long term storage and
throughput contracts, and additional bunker and bulk product sales, due in part
to higher volumes of bunker fuel delivered. Earnings before interest expense,
income taxes, depreciation and amortization is presented to provide additional
information related to our ability to service debts and is not an alternative
measure of operating results or cash flow from operations.

The quarterly results for the three months ended March 31, 1999 are
preliminary, have not been reviewed by our independent certified public
accountants, and are subject to change. These quarterly results are not
necessarily indicative of future results of operations. This information should
be read in conjunction with our consolidated financial statements and notes
thereto included elsewhere in this prospectus. This information was prepared by
us on a basis consistent with our audited financial statements and our unaudited
pro forma consolidated condensed financial statements. This information includes
all adjustments, consisting of normal and recurring adjustments, that we
consider necessary for a fair presentation of the data. The pro forma results
presented below were prepared to illustrate the estimated effects of the pro
forma transactions discussed in the "Unaudited Pro Forma Consolidated Condensed
Financial Statements" as if these transactions had occurred as of the beginning
of each of the periods presented.

(DOLLARS IN THOUSANDS)
(UNAUDITED)
----------------------------------------------------------------
PRELIMINARY
QUARTER
ENDED
QUARTER ENDED QUARTER ENDED MARCH 31,
MARCH 31, 1998 DECEMBER 31, 1998 1999
----------------------- ----------------------- ----------
HISTORICAL PRO FORMA HISTORICAL PRO FORMA HISTORICAL

Total revenues............................................ $ 30,364 $29,627 $ 37,227 $37,227 $ 37,415
Operating income.......................................... 2,999 3,459 6,709 7,047 4,333
Net income (loss)......................................... (2,233) 52 3,821 4,064 (1,655)
Cash flow from operations................................. 6,627 N/A (344) N/A 8,972
EBITDA.................................................... 5,804 6,116 11,857 9,846 7,252

PRO FORMA

Total revenues............................................ $37,415
Operating income.......................................... 4,671
Net income (loss)......................................... 1,452
Cash flow from operations................................. N/A
EBITDA.................................................... 7,590

- ------------------

N/A - Not applicable

On a preliminary basis, we expect operating income for the first quarter of
1999 to be 35% below operating income earned for the fourth quarter of 1998 of
$6.7 million and our net loss for the first quarter of 1999 to be 143% below our
net income for the fourth quarter of 1998 of $3.8 million. Preliminarily,
earnings before interest expense, income taxes, depreciation and amortization
for the first quarter of 1999 will be 24% below earnings before interest
expense, income taxes, depreciation and amortization of $9.5 million earned for
the fourth quarter of 1998 excluding the non-cash reversal to the second quarter
valuation adjustment of $2.3 million. Included in our preliminary operating
income, net loss and earnings before interest expense, income taxes,
depreciation and amortization for first quarter of 1999 is a one-time charge in
the amount of approximately $1.9 million related to a management bonus accrued
during the first quarter of 1999. This bonus is intended to partially reimburse
management for certain adverse tax consequences that will result from this
offering and other past compensation arrangements. See "Management--Special
Management Bonus" for further discussion of this matter.

Had we not incurred the management bonus of $1.9 million, operating income,
net income and earnings before interest expense, income taxes, depreciation and
amortization for the first quarter of 1999 on a preliminary basis would have
been approximately $6.3 million, $0.3 million and $9.2 million, respectively.
These amounts are approximately 6%, 80% and 3% less than the results achieved
for the fourth quarter of 1998, respectively, exclusive of the non-cash reversal
of the second quarter valuation adjustment. These decreases are primarily due to
lower terminaling services revenue resulting from fewer vessel calls during the
first quarter of 1999.

Excluding the management bonus of $1.9 million, pro forma operating income,
pro forma net income and pro forma earnings before interest expense, income
taxes, depreciation and amortization for the first quarter of 1999 on a
preliminary basis would have been $6.6 million, $3.4 million and $9.5 million,
down approximately 6%, 16% and 3% from the fourth quarter 1998 pro forma
results, respectively.

CONTRACT EXTENSIONS

One of our customers using our Point Tupper facilities, Tosco Corporation,
recently exercised its option to extend its storage and throughput agreement
with us into 2004. For further information regarding the Tosco contract, please
see "Business--Customers." In addition, a bunker supply contract with a major
state-owned oil producer was renewed until February 2000. For further
information regarding this supply contract, please see "Business--Suppliers."

FORWARD-LOOKING STATEMENTS

Some of the information in this prospectus includes forward-looking
statements. The statements about our plans, strategies, and prospects under the
headings "Prospectus Summary," "Management's Discussion and Analysis of
Financial Condition and Results of Operations" and "Business" are
forward-looking statements. Additional forward-looking statements can be
identified by the use of forward-looking terminology such as "may," "will,"
"believe," "anticipate," "expect" and "estimate."

All forward-looking statements involve risks and uncertainties. Although we
believe that our plans, intentions and expectations reflected in or suggested by
forward-looking statements are reasonable, we may not achieve them. Important
factors that could cause actual results to differ materially from our
forward-looking statements are included in "Risk Factors" and elsewhere in this
prospectus. These factors include, but are not limited to, fluctuations in the
supply of and demand for crude oil and other petroleum products, changes in the
petroleum terminaling industry, added costs due to changes in government
regulations affecting the petroleum industry, the loss of a major customer, the
financial condition of our customers, interruption of our operations caused by
adverse weather conditions, the condition of the U.S. economy, risks associated
with our efforts to comply with year 2000 requirements, and other factors
included in this prospectus.

RISK FACTORS

You should carefully consider the following factors and other information
in this prospectus before deciding to invest in common shares. The risks and
uncertainties described below are not the only ones facing us. Additional risks
and uncertainties not presently known to us or that we currently deem immaterial
may also impair our business operations.

If any of the following risks actually occur, our business, financial
condition, results of operations or ability to make the target quarterly
distribution could be materially adversely affected. In such case the trading
prices of the common shares could decline, and you may lose all or part of your
investment.

RISKS INHERENT IN THE COMMON SHARES

THE ACTUAL AMOUNTS OF CASH DISTRIBUTIONS TO YOU WILL DEPEND ON FACTORS WHICH
MAY BE BEYOND OUR CONTROL.

Although we will make distributions equal to all of our available cash, we
can give no assurances regarding the amounts of available cash, if any, that we
will generate. Therefore, we cannot guarantee that we will make the target
quarterly distribution. The actual amounts of cash distributions may fluctuate
and will depend upon numerous factors relating to our business which may be
beyond our control, including:

o cash flow generated by operations,
o required principal and interest payments on our debt,
o restrictions contained in our debt instruments,
o issuances of debt and equity securities by us,
o fluctuations in working capital,
o capital expenditures,
o adjustments in reserves, including the expenditure of unfunded previously
reserved amounts,
o prevailing economic conditions, and
o financial, business and other factors.

OUR ABILITY TO MAKE CASH DISTRIBUTIONS TO YOU IS DEPENDENT NOT ONLY ON OUR
PROFITABILITY, BUT ALSO ON OUR OPERATING CASH FLOW, DRAWS FROM OUR CASH ON
HAND AND WORKING CAPITAL BORROWINGS.

Cash distributions are dependent primarily on our operating cash flow,
draws from our cash on hand and working capital borrowings, and not solely on
our profitability, which is affected by non-cash items. Therefore, cash
distributions might be made during periods when we record losses and might not
be made during periods when we record profits. The articles of Statia Terminals
Group give it discretion in establishing reserves for the proper conduct of our
business, and the exercise of that discretion will affect the amount of
available cash.

WE MAY NOT HAVE ENOUGH AVAILABLE CASH TO MAKE THE TARGET QUARTERLY
DISTRIBUTION TO YOU.

We will need approximately $13.7 million and $6.8 million of available cash
from our operating surplus to make the target quarterly distributions of $1.80
per share on an annual basis on the common and subordinated shares,
respectively, to be outstanding immediately after this offering. The amount of
pro forma available cash from our operating surplus generated during the year
ended December 31, 1998 was approximately $12.2 million or $1.60 per common
share on an annual basis. This amount would not have been sufficient to allow us
to make the full target quarterly distributions for that year on the common
shares and would not have been sufficient to allow us to make any distribution
on the subordinated shares. For the calculation of pro forma available cash for
the year ended December 31, 1998 from our operating surplus had the
restructuring to be consummated at the closing of this offering been completed
on January 1, 1998, see Appendix B. Based on preliminary results for the first
quarter of 1999 and assuming that the offering had closed on January 1, 1999,
the amount of pro forma available cash from our operating surplus generated
during this quarter would have been sufficient to allow us to make the full
target quarterly distribution on the common shares but would not have been
sufficient to allow us to make the full target quarterly distribution on the
subordinated shares.

Because our terminaling activities are cyclical, it is likely that we will
make additions to reserves during some quarters in order to fund operating
expenses, capital expenditures, interest and principal payments, and cash
distributions to holders of common and subordinated shares in future quarters.
The effect of the establishment of such reserves

will be to increase the likelihood that we will make the target quarterly
distribution in any given quarter but to decrease the likelihood that we will
distribute any amount in excess of the target quarterly distribution in that
quarter. As a result of these and other factors, we can give no assurances
regarding the actual levels of cash distributions we will make to holders of
common and subordinated shares.

THE INDENTURE MAY LIMIT THE AMOUNT OF DISTRIBUTIONS WE CAN MAKE TO YOU.

Statia Terminals Group depends entirely on dividends from Statia Terminals
International to make distributions to you. Statia Terminals International's
ability to pay dividends is restricted by the indenture relating to its mortgage
notes which generally requires, among other things, that it pay dividends:

o only out of a pool equal to (a) 50% of its accrued consolidated net
income (less 100% of accrued consolidated net loss) since November 27,
1996 plus (b) the net cash proceeds of any sale of its capital stock; and

o only when its consolidated fixed charge coverage ratio is at least 2
to 1.

We will redeem or acquire 25% of the mortgage notes, and 35% of the
mortgage notes if the underwriters exercise their over-allotment option in full,
with the proceeds of this offering. We currently intend to redeem the remainder
of the mortgage notes on or around November 15, 2000. However, this redemption
probably will require refinancing since we expect that we will not be able to
redeem the mortgage notes at November 15, 2000 or even at maturity on
November 15, 2003 out of our projected operating cash flow. We can give no
assurances that we will be able to refinance this indebtedness on terms
acceptable to us, if at all. The terms of the debt incurred in connection with
any refinancing may also include terms that could limit our ability to make
distributions.

Although we can give no assurances, we believe that, at least through
November 15, 2000, the indenture restrictions will permit Statia Terminals
International to pay sufficient dividends to Statia Terminals Group to cover at
least the target quarterly distribution that we would be required to make on the
common and subordinated shares out of available cash from operating surplus. For
a discussion of the indenture restrictions, see "Restrictions on
Distributions--Restrictions Imposed by Indenture."

SINCE A SUBSTANTIAL PORTION OF OUR CASH FLOW MUST BE DEDICATED TO DEBT
SERVICE, OUR LEVEL OF INDEBTEDNESS MAY LIMIT THE AMOUNT OF DISTRIBUTIONS WE
CAN MAKE TO YOU.

As of December 31, 1998, our total long-term indebtedness on a pro forma
basis, assuming that the restructuring and the issuance of the common and
subordinated shares had already occurred, was $101.3 million. Subject to the
restrictions in Statia Terminals International's indenture relating to the
mortgage notes and our $17.5 million revolving credit facility, we may incur
additional indebtedness from time to time to provide working capital, to finance
acquisitions or capital expenditures or for other corporate purposes.

Our level of indebtedness could have important consequences to holders of
the common shares, because of the following:

o $11.9 million per year of our cash flow from operations must be dedicated
to debt service and will not be available for other purposes;

o our ability to obtain additional debt financing in the future for working
capital, capital expenditures or acquisitions may be limited; and

o our level of indebtedness could limit our flexibility in reacting to
changes in the industry and economic conditions generally.

Our ability to make distributions on the common shares and our ability to
satisfy our other debt obligations will depend upon our future operating
performance, which will be affected by prevailing economic conditions and
financial, business and other factors, most of which are beyond our control. If
we have an unexpected downturn in our operations, we could be forced to adopt an
alternative strategy that may include reducing or eliminating distributions,
reducing or delaying capital expenditures, selling assets, restructuring or
refinancing our indebtedness or seeking additional equity capital. We can give
no assurances that we could effect any of these strategies on satisfactory
terms, if at all.

NETHERLANDS ANTILLES LAW MAY LIMIT THE AMOUNT OF DISTRIBUTIONS WE CAN MAKE
TO YOU.

We must comply with Netherlands Antilles laws that govern when we may make
distributions to the holders of common and subordinated shares and incentive
rights. Generally, we may not make distributions to you unless our stockholders'
equity

is greater than the par value of our outstanding capital. At the closing
of this offering, the par value of our outstanding capital will be approximately
$0.1 million. For a discussion of restrictions imposed by Netherlands Antilles
law, see "Restrictions on Distributions--Restrictions Imposed by Netherlands
Antilles Law."

ASSUMPTIONS CONCERNING OUR FUTURE OPERATIONS MAY NOT BE REALIZED AND,
THEREFORE, YOU MAY NOT RECEIVE DISTRIBUTIONS IF AVAILABLE CASH IS LESS THAN
CURRENTLY EXPECTED.

We have relied on assumptions concerning our future operations in
establishing the terms of this offering, including the number and initial public
offering price of the common shares, the amount of subordinated shares and
incentive rights to be received by the current holders of Statia Terminals
Group's equity securities and the target quarterly distribution. For these
purposes we have assumed that:

o the demand for terminaling services, crude oil and petroleum products,
and sales of bunker and other bulk products will not materially decline
from current levels;

o no material accidents or other force majeure events will occur that
disrupt our terminaling facilities; and

o market, regulatory and overall economic conditions will not change
substantially.

Whether our assumptions are realized, in many cases, is not within our
control and cannot be predicted with any degree of certainty. In the event that
our assumptions are not realized, the actual amount of available cash from
operating surplus that we generate could be substantially less than that
currently expected and may be less in any quarter than that required to make the
target quarterly distribution.

OUR ABILITY TO ISSUE ADDITIONAL COMMON SHARES DURING THE SUBORDINATION
PERIOD MAY DILUTE THE INTERESTS OF YOUR COMMON SHARES.

Based on the circumstances of each case, the issuance of additional common
shares or securities ranking senior to the common shares may:

o dilute the value of the interests of the then-existing holders of common
shares in our net assets;

o dilute the interests of holders of common shares in distributions by us;
and

o modify the preference of holders of common shares upon dissolution and
liquidation of Statia Terminals Group.

During the subordination period, we are authorized, in our discretion, to
issue up to 4,000,000 additional common shares. In addition, we are authorized
to issue common shares upon the exercise of the underwriters' over-allotment
option, upon conversion of subordinated shares, pursuant to employee benefit
plans, upon combination or subdivision of common shares or in connection with
certain combinations and capital improvements. After the end of the
subordination period, we may issue the authorized but unissued common shares,
without the approval of the holders of the common shares.

ISSUANCE OF ADDITIONAL COMMON SHARES MAY REDUCE OUR ABILITY TO MAKE THE
TARGET QUARTERLY DISTRIBUTION ON YOUR SHARES.

Our ability to make the full target quarterly distribution on all the
common shares may be reduced by any increase in the number of outstanding common
shares. We will have more common shares outstanding as a result of future
issuances of common shares or as a result of the conversion of subordinated
shares pursuant to the termination of the subordination period or pursuant to
the provisions permitting early conversion. By making a distribution of
available cash from interim capital transactions, we may accelerate conversion.
Any of these actions will increase the percentage of the aggregate target
quarterly distribution made to the holders of common shares and decrease the
percentage of the aggregate target quarterly distributions made to the holders
of subordinated shares. As a result we may:

o reduce the amount of support provided by the subordination feature of the
subordinated shares; and

o increase the risk that we will be unable to make the target quarterly
distribution in full on all the common shares.

SINCE SOME OF OUR DIRECTORS MAY HOLD SUBORDINATED SHARES AND/OR INCENTIVE
RIGHTS, THEIR INTERESTS WITH RESPECT TO OUR BUSINESS AND DISTRIBUTIONS MAY
CONFLICT WITH YOUR INTERESTS.

Some of our directors may hold, directly or indirectly, subordinated shares
and/or incentive rights. Decisions of the board of directors with respect to the
amount and timing of asset purchases and sales, cash expenditures, borrowings,
issuances of additional common shares and the creation, reduction, cancellation
or increase of reserves in any quarter will affect whether, or the extent to
which, there is sufficient available cash from our operating surplus to meet the
target quarterly distribution and additional distribution levels on all common
and subordinated shares in a given quarter or in subsequent quarters. In
addition, actions by the board of directors may have the effect of enabling the
holders of subordinated shares or incentive rights to receive distributions on
subordinated shares or incentive distributions or hastening the expiration of
the subordination period or the conversion of subordinated shares into common
shares.

Netherlands Antilles law protecting the interests of minority shareholders
may not be as protective in all circumstances as the law protecting minority
shareholders in U.S. jurisdictions. In addition, under Netherlands Antilles law,
liability of corporate directors is basically limited to cases of willful
malfeasance and gross negligence. The articles of Statia Terminals Group permit
it to indemnify its directors except in cases where the director acted in bad
faith or a manner in which he did not reasonably believe to be in, or not
opposed to, our best interests.

YOU WILL EXPERIENCE IMMEDIATE AND SUBSTANTIAL DILUTION OF YOUR COMMON
SHARES.

The initial public offering price of $20.00 per common share exceeds the
pro forma tangible net book value of $10.02 per common share. You will incur
immediate and substantial dilution of tangible net book value of $9.98 per
common share.

IF WE DISTRIBUTE TO YOU AVAILABLE CASH FROM INTERIM CAPITAL TRANSACTIONS, WE
MAY REDUCE YOUR SHARE OF FUTURE DISTRIBUTIONS IN RELATION TO THE INCENTIVE
RIGHTS.

We may generate available cash from interim capital transactions, which are
generally sources other than operations or working capital borrowings. If we
distribute to you available cash from interim capital transactions, we will
reduce proportionately the target quarterly distribution and the additional
distribution levels. If we distribute enough available cash from interim capital
transactions to pay back to you the entire initial public offering price of your
common shares plus any common share arrearages, the holders of common and
subordinated shares will be entitled to only 50% of future distributions of
available cash and holders of the incentive rights will be entitled to receive
the remaining 50%.

YOU MAY NOT BE ABLE TO SUE US EFFECTIVELY IN THE NETHERLANDS ANTILLES OR
CANADA.

Netherlands Antilles

Statia Terminals Group is incorporated under the laws of the Netherlands
Antilles, and all of its operating assets are located outside the U.S.
Accordingly, it may not be possible to effect service of process on Statia
Terminals Group within the U.S. other than through its appointed agent for
service of process. In addition, it may be difficult for holders of common
shares to realize in the Netherlands Antilles upon a judgment rendered against
Statia Terminals Group in a U.S. court.

We have been advised by our Netherlands Antilles counsel, Smeets Thesseling
van Bokhorst Spigt as follows. Legal actions may be instituted directly against
Statia Terminals Group in the Netherlands Antilles. However, to enforce in the
Netherlands Antilles a judgment for the payment of money obtained against Statia
Terminals Group in U.S. courts, an enforcement action must be brought before a
competent Netherlands Antilles court. A Netherlands Antilles court will
generally recognize a U.S. judgment if:

o procedural protections provided in the Netherlands Antilles have been
observed; and

o the judgment obtained in the U.S. and the proceedings related to it are
not contrary to natural justice or public policy in the Netherlands
Antilles.

If a U.S. judgment is not recognized by a Netherlands Antilles court,
relitigation of the merits will be required in order to obtain enforcement of
the judgment in the Netherlands Antilles. In addition, it is unlikely that:

o the courts of the Netherlands Antilles would enforce judgments entered by
U.S. courts predicated upon the civil liability provisions of the U.S.
federal securities laws; or

o actions can be brought in the Netherlands Antilles in relation to civil
liabilities predicated upon the U.S. federal securities laws.

Canada

Our subsidiary, Statia Terminals Canada, Incorporated is incorporated under
the laws of Nova Scotia, Canada, and all of its assets are located outside the
U.S., primarily in the Province of Nova Scotia, Canada. Accordingly, it may not
be possible to effect service of process on Statia Terminals Canada within the
U.S. other than through its appointed service of process agent. In addition, it
may be difficult for holders of common shares to realize in Canada upon a
judgment obtained against Statia Terminals Canada in a U.S. court.

We have been advised by our Nova Scotia counsel, Stewart McKelvey Stirling
Scales as follows. Legal actions may be instituted directly against Statia
Terminals Canada in the Province of Nova Scotia and a Nova Scotia court would
recognize and enforce a final judgment obtained against Statia Terminals Canada
in a U.S. court provided that:

o the U.S. court validly took jurisdiction under Nova Scotia law;

o the judgment was not obtained by fraud, or in a manner contrary to
natural justice and its enforcement would not be inconsistent with public
policy, as applied by a Nova Scotia court; and

o the enforcement of such judgment in Nova Scotia does not constitute
directly or indirectly the enforcement of U.S. penal law.

Such Nova Scotia counsel has also advised that there is some doubt that:

o the courts of the Province of Nova Scotia would enforce judgments entered
by U.S. courts predicated upon the civil liability provisions of the U.S.
federal securities laws; and

o actions can be brought in the Province of Nova Scotia in relation to
civil liabilities predicated upon the U.S. federal securities laws.

CASTLE HARLAN AND OUR MANAGEMENT HAVE PRACTICAL CONTROL OVER MOST MATTERS
REQUIRING SHAREHOLDER APPROVAL.

Upon the closing of the offering, all of the subordinated shares and
incentive rights will be transferred to Statia Terminals Holdings N.V., a
Netherlands Antilles corporation that will be controlled by Castle Harlan, the
directors and executive officers of Statia Terminals Group and their affiliates.
As a result, Statia Terminals Holdings will own approximately 33% of the
outstanding shares entitled to vote. As a result of this ownership, restrictions
on transfer of the common shares and provisions of Netherlands Antilles law,
Statia Terminals Holdings will be able to exercise practical control over most
matters requiring shareholder approval, including the election of directors.

A NON-NEGOTIATED CHANGE OF CONTROL IS UNLIKELY.

Netherlands Antilles law and the articles of Statia Terminals Group would
make it more difficult for a third party to acquire control of us without the
cooperation of Statia Terminals Holdings, even if such change in control would
be beneficial to shareholders.

THERE MAY NOT BE A MARKET FOR OUR COMMON SHARES.

Prior to the offering, there has been no public market for the common
shares. The common shares have been conditionally approved for listing on the
Nasdaq National Market, subject to official notice of issuance. However, we can
provide no assurances that a trading market for the common shares will develop
on the Nasdaq National Market or that you will be able to sell your shares
quickly.

RISKS INHERENT IN OUR BUSINESS

OUR OPERATIONS ARE LARGELY DEPENDENT ON THE DEMAND FOR CRUDE OIL AND
PETROLEUM PRODUCTS IMPORTED INTO THE U.S. AND A DECREASE IN SUCH DEMAND MAY
ADVERSELY AFFECT OUR FINANCIAL RESULTS.

Our operations are largely dependent on the demand for crude oil and
petroleum products imported into the U.S. The demand for imported crude oil and
petroleum products in the U.S. is influenced by a number of factors, including
weather conditions, economic growth, pricing of petroleum products and
substitute products, government policy, transportation costs, domestic
production and refining capacity and utilization. Changes in government
regulation that affect the petroleum industry, including the imposition of a
surcharge on imported oil or an increase in taxes on crude oil and oil products,
could adversely affect our business. These factors are beyond our control, and
we can give no assurances that conditions affecting supply and demand of crude
oil and petroleum products favorable to our business and financial condition and
our ability to make the target quarterly distribution will exist.

FORWARD AND CURRENT PRICING OF CRUDE OIL AND PETROLEUM PRODUCTS AND ANY
REDUCED AVAILABILITY OR INCREASED COST OF TANKERS MAY ADVERSELY AFFECT OUR
FINANCIAL RESULTS.

We intend to make a target quarterly distribution based upon our available
cash, if any. Our available cash is directly affected by changes in the
relationship between forward and current pricing of crude oil and petroleum
products. We have experienced losses in recent years.

When the forward prices for crude oil and petroleum products that we store
fall below spot prices for any length of time, customers using our storage
facilities are less likely to store such product, thereby reducing storage
utilization levels. This market condition is referred to as "backwardation."
When forward prices exceed spot prices for any length of time the market is said
to be in "contango." When the crude oil and petroleum products market is in
contango for a specific product by an amount exceeding storage costs, time value
of money, cost of a second vessel and the cost of loading and unloading at the
terminal, the demand for storage capacity at our terminals for such product
usually increases. Thus, our operations are also dependent on the availability
of and the reasonableness of charter rates of very-large and ultra-large crude
carriers to transfer products to our facilities and of smaller vessels to
subsequently transfer products from our facilities to downstream users.

Historically, heating oil has been in contango during the summer months and
gasoline has been in contango during the winter months. We can give no
assurances that the market will follow this pattern in the future. For example,
from the beginning of 1995 to late 1997, all segments of the crude oil and
petroleum products markets were generally in backwardation. As a result, we
believe that utilization of our facilities was adversely impacted during that
period. Since late 1997 all segments of the crude oil and petroleum products
markets have generally been in contango, and consequently we are currently
experiencing an increase in the utilization of our facilities. We had losses in
1996, 1997 and 1998. The forward pricing market began to move toward contango in
late 1997 and remained in contango for a full year in 1998. Our net losses
decreased from $8.4 million in 1997 to $1.5 million in 1998. On a pro forma
basis, our net income increased from $1.7 million in 1997 to $9.7 million in
1998. However, we can give no assurances that such market conditions will
continue.

IF WE CANNOT RENEW OR REPLACE THE LONG-TERM CONTRACTS WITH ONE OF OUR TWO
MAJOR CUSTOMERS WITHIN THE NEXT 12 MONTHS, THEN OUR BUSINESS, FINANCIAL
CONDITION AND ABILITY TO PAY THE TARGET QUARTERLY DISTRIBUTION MAY BE
ADVERSELY AFFECTED.

Revenues from Bolanter Corporation N.V., an affiliate of Saudi Aramco,
constituted approximately 8.9% of our total 1998 revenues and an additional 7.7%
was generated by the movement of Bolanter's products through our St. Eustatius
terminal. We can give no assurances that this long-term contract will be renewed
at the end of its term, January 31, 2000. If we fail to renew or replace this
contract or we otherwise lose any significant portion of our revenues from this
customer, we may suffer a material adverse effect on our business, financial
condition and ability to make the target quarterly distribution. We also have
long-term contracts with other key customers. We can give you no assurance that
these contracts will be renewed at the end of their terms or that we will

be able to enter into other long-term contracts on terms favorable to us, or at
all.

IF THE BENEFICIAL TAX STATUS OF OUR FACILITIES IS TERMINATED, OUR BUSINESS,
FINANCIAL CONDITION AND ABILITY TO MAKE THE TARGET QUARTERLY DISTRIBUTION
MAY BE ADVERSELY AFFECTED.

Our St. Eustatius facility has qualified for designation as a free trade
zone and our Point Tupper facility has qualified for designation as a customs
bonded warehouse. Such status allows customers and us to transship commodities
to other destinations with minimal Netherlands Antilles or Canadian tax effects.

In Canada, the customs bonded warehouse designation expires annually. We
routinely renew this designation through compliance with regulations, including
providing evidence of bonding arrangements and fee payments. It is possible that
we could lose our customs bonded warehouse designation in Canada through non-
compliance, inability to obtain the necessary bonding arrangements or as a
result of significant changes in regulations.

Should these free trade zone or custom bonded warehouse designations
terminate, our business, financial condition and ability to make the target
quarterly distribution may be adversely impacted.

A SCHEDULED EXPIRATION OF SOME OF OUR TAX DEDUCTIONS AND CREDITS COULD
INCREASE OUR CANADIAN INCOME TAXES AND MAY ADVERSELY AFFECT OUR ABILITY TO
MAKE THE TARGET QUARTERLY DISTRIBUTION.

Some of the net operating loss and investment tax credit carryforwards of
Statia Terminals Canada are scheduled to expire at various times through the
year 2002. We expect that in 1999, these carryforwards will reduce our Canadian
income tax expense by approximately $2.3 million. Therefore, if the operations
of Statia Terminals Canada do not produce increasing after-tax cash flow
sufficient to offset any increase in taxes resulting from such expirations, or
if we do not otherwise offset any shortfall in available cash required to make
the target quarterly distribution, we may not be able to make the full amount of
the target quarterly distribution on all of the common and subordinated shares.

ADVERSE WEATHER SUCH AS HURRICANES CAN NEGATIVELY AFFECT OUR OPERATIONS.

Our operations are disrupted from time to time by adverse weather
conditions. Since its construction in 1982, our St. Eustatius facility has been
adversely impacted by six hurricanes. The three that most seriously affected us
occurred in the third and fourth quarters of 1995. Operations at the St.
Eustatius facility ceased for varying lengths of time from August 28, 1995 to
October 3, 1995, and during September 1995, vessel calls at the St. Eustatius
facility decreased substantially. Through December 31, 1997, we spent
$20.6 million on repairs and improvements related to the 1995 hurricanes of
which $12.6 million was covered by insurance. Hurricane Georges in September
1998 caused approximately $5.8 million in damage of which all but $0.5 million
was covered by insurance. We have no business interruption insurance, except
with respect to our offshore single point mooring system.

COST COMPETITION FROM LIGHTERING AND LARGER AND WELL-FINANCED COMPETITORS
MAY HAVE AN ADVERSE AFFECT ON OUR BUSINESS, FINANCIAL CONDITION AND ABILITY
TO MAKE THE TARGET QUARTERLY DISTRIBUTION.

Our principal competition with respect to our transshipment business is
from lightering. Under current market conditions, lightering is generally less
expensive than terminaling, and it is possible that an increasing percentage of
our transshipment business could be handled through lightering competitors. In
addition, some companies offering marine terminaling facilities have more
storage capacity and greater financial and other resources than we do. We
believe that most of our principal competitors are less highly-leveraged than we
are and may therefore have greater financing and operating flexibility than we
do. We can give no assurances that we will not encounter increased competition
in the future, which could have a material adverse effect on our business,
financial

condition and our ability to make the target quarterly distribution.

ENVIRONMENTAL RISKS AND NEW GOVERNMENTAL REGULATIONS MAY INCREASE THE COST
OF OUR OPERATIONS AND GIVE RISE TO UNEXPECTED LIABILITIES.

Our operations and properties are subject to laws and regulations in our
geographic areas of operation relating to environmental, health and safety
matters. The nature of our operations and previous operations by others at our
facilities exposes us to the risk of claims with respect to environmental,
health and safety matters, and we can give no assurances that we will not incur
material costs or liabilities in connection with such claims. The costs
associated with our planned environmental investigation, remediation and
upgrading at the Point Tupper terminal could be substantial, although we believe
most of such costs are the responsibility of Praxair under an indemnity given in
connection with the Castle Harlan acquisition. We believe that the remainder are
covered by accruals. As of December 31, 1998, our environmental accruals were
approximately $1.5 million. We do not have cash reserves set aside equal to such
accruals. In addition, future events, such as the discovery of environmental
conditions, changes in existing laws and regulations or their interpretation,
the issuance of penalties for regulatory violations, or more vigorous
enforcement policies of regulatory agencies, may give rise to unexpected
expenditures or liabilities that could be material to our business, financial
condition and our ability to make the target quarterly distribution. For a more
detailed discussion of our environmental, health and safety matters, see
"Management's Discussion and Analysis of Financial Condition and Results of
Operations--Environmental, Health and Safety Matters" and
"Business--Environmental, Health and Safety Matters."

PRAXAIR MAY DISPUTE OR DELAY PAYMENTS WITH RESPECT TO ITS INDEMNITY
OBLIGATIONS TO US, AND SUCH DISPUTES OR DELAYS MAY AFFECT OUR ABILITY TO PAY
THE TARGET QUARTERLY DISTRIBUTION.

When Castle Harlan acquired us from Praxair, Praxair agreed to indemnify us
from the costs of some matters, including some environmental, tax and legal
matters. Any dispute or delay in payment under Praxair's indemnification
obligations to us could affect our ability to pay the target quarterly dividend
during a particular quarter or quarters.

THE ELECTRONIC DATE-SENSITIVE EQUIPMENT AT OUR TERMINALING FACILITIES AND
ADMINISTRATIVE OFFICES MAY NOT BE READY FOR YEAR 2000 PROBLEMS.

We can give no assurance that our programs designed to minimize the impact
of the transition to the year 2000 on our electronic date-sensitive equipment,
including the terminal operations software at our facilities, will be completely
successful or that the costs of implementing them will not exceed our current
estimates. If they are not, the date change from 1999 to 2000 could materially
affect our results of operations, financial condition or our ability to make the
target quarterly distribution. Our operations may also be negatively affected by
the inability of third parties, including our major customers and suppliers,
with whom we deal to manage this problem in a timely manner. The full extent of
any adverse impact on us is impossible to determine. For a more detailed
discussion of our year 2000 readiness, see "Management's Discussion and Analysis
of Financial Condition and Results of Operations--Information Technology and the
Year 2000."

THE RESTRUCTURING

In November 1996 Castle Harlan, our management and others acquired control
of us from Praxair. As part of this acquisition:

o we issued $40 million of preferred stock to Praxair;

o we issued $55 million of preferred stock and common stock to Castle
Harlan and its affiliates;

o we issued $4.5 million of preferred stock and common stock to particular
members of our management;

o we issued $1.5 million of preferred stock and common stock to a
consultant of ours;

o Statia Terminals International received a capital contribution of
$98.5 million from Statia Terminals Group, consisting of $55.5 million of
cash and $43.0 million of equity in some of our subsidiaries; and

o Statia Terminals International and Statia Terminals Canada, Incorporated
issued $135.0 million of mortgage notes.

We used a portion of the contributed capital and proceeds from the issuance of
the mortgage notes to:

o pay the cash portion of the purchase price of approximately
$174.1 million to Praxair, and

o pay $16.0 million of commissions, fees and expenses.

In connection with but prior to the acquisition, Praxair repaid all of our
third-party indebtedness, including an off-balance sheet lease obligation, bank
debts, preferred stock from a former affiliate and related party advances.

All of the currently outstanding stock of the issuer is owned as follows:

o Praxair holds 20,000 shares of Series A Preferred Stock, 10,000 shares of
Series B Preferred Stock and 10,000 shares of Series C Preferred Stock;

o Castle Harlan and its affiliates hold 13,850 shares of Series D Preferred
Stock, 33,750 shares of Series E Preferred Stock and 33,750 shares of
common stock;

o particular directors and members of our management hold 4,724 shares of
Series E Preferred Stock and 4,724 shares of common stock and options to
acquire an additional 6,145 shares of common stock; and

o other shareholders hold 2,500 shares of Series E Preferred Stock and
2,500 shares of common stock.

There are no subordinated shares or incentive rights outstanding, and Statia
Terminals Group's currently outstanding common stock, all of which will be
reclassified by Statia Terminals Group at the closing of this offering as
described in the next paragraph, does not have the same rights and provisions as
the common shares offered through this prospectus.

Upon the issuance of the common shares at the closing of this offering
Statia Terminals Group will redeem or reclassify all of its currently
outstanding capital stock and issue the subordinated shares and incentive rights
as follows:

o using the net proceeds of this offering, Statia Terminals Group will
redeem all of its Series A Preferred Stock, Series B Preferred Stock,
Series C Preferred Stock, Series D Preferred Stock and Series E Preferred
Stock at their respective liquidation preferences plus all cumulative
unpaid dividends on such preferred stock;

o Statia Terminals Group will reclassify the 47,119 shares of its
outstanding common stock (which will include 6,145 shares of common stock
to be issued upon exercise of options at or by the closing) as 471,190
subordinated shares;

o Statia Terminals Group will issue an additional 3,328,810 subordinated
shares plus 38,000 incentive rights to the holders of the remaining
outstanding common stock; and

o all of the subordinated shares and incentive rights will be transferred
to Statia Terminals Holdings by the holders thereof.

SHARES ISSUED AND OUTSTANDING SHARES AND INCENTIVE RIGHTS TO BE
PRIOR TO THE RESTRUCTURING AND ACTION TO BE TAKEN PURSUANT TO ISSUED AND OUTSTANDING AFTER THE
OFFERING THE RESTRUCTURING AND OFFERING RESTRUCTURING AND OFFERING
- ------------------------------------ ------------------------------------ ------------------------------------

20,000 Series A .................... Redeemed None
Preferred Shares

10,000 Series B .................... Redeemed None
Preferred Shares

10,000 Series C .................... Redeemed None
Preferred Shares

13,850 Series D .................... Redeemed None
Preferred Shares

40,974 Series E .................... Redeemed None
Preferred Shares

47,119 shares of common stock,
after exercise of options ........ Reclassified 471,190 subordinated shares

Additional issuance to holders of 3,328,810 subordinated shares
outstanding common stock 38,000 incentive rights

Public offering 7,600,000 common shares

USE OF PROCEEDS

The net proceeds we will receive from the sale of the common shares offered
through this prospectus will be approximately $142.1 million, or $156.3 million
if the underwriters exercise their over-allotment option in full, after
deducting underwriting discounts and commissions but before deducting fees and
expenses incurred in connection with this offering. We anticipate using the net
proceeds of this offering and other cash on hand to:

o redeem all of Statia Terminals Group's Series A Preferred Stock,
Series B Preferred Stock, and Series C Preferred Stock for
$40.0 million;

o pay $9.7 million in accrued dividends with respect to Statia Terminals
Group's Series A Preferred Stock, Series B Preferred Stock, and Series C
Preferred Stock;

o redeem all of Statia Terminals Group's Series D Preferred Stock and
Series E Preferred Stock for approximately $54.8 million;

o purchase additional capital stock of Statia Terminals International for
approximately $37.7 million, all of which Statia Terminals International
will use to redeem or acquire 25% of its mortgage notes, including a
$4.0 million premium over par, or, if the underwriters exercise their
over-allotment option in full, approximately $52.8 million to redeem or
acquire 35% of the mortgage notes including a $5.6 million premium over
par; and

o pay approximately $5.1 million representing the fees and expenses
incurred in connection with this offering.

CAPITALIZATION

The following table sets forth:

o our historical capitalization as of December 31, 1998,

o the pro forma transaction adjustments required to reflect the pro forma
transactions, including the sale of the common shares offered in this
prospectus, the application of the net proceeds from such sale as
described in "Use of Proceeds" and the restructuring, and

o our pro forma capitalization as of December 31, 1998.

The table is derived from, should be read in conjunction with, and is
qualified in its entirety by reference to the historical and pro forma financial
statements and notes thereto included elsewhere in this prospectus.

AS OF DECEMBER 31, 1998 (UNAUDITED)
----------------------------------------
(DOLLARS IN THOUSANDS)
TRANSACTION PRO FORMA
HISTORICAL ADJUSTMENTS AS ADJUSTED
---------- ----------- -----------

Cash and cash equivalents................................................. $ 14,061 $ (3,487) $ 10,574
---------- --------- ---------
Long-term debt............................................................ 135,000 (33,750) 101,250
Redeemable Preferred Stock Series A through C............................. 40,000 (40,000) --

Stockholders' equity:
Preferred Stock Series D and E.......................................... 54,824 (54,824) --
Notes receivable from stockholders...................................... (1,474) -- (1,474)
Common stock............................................................ 4 (4) --
Common shares........................................................... -- 76 76
Subordinated shares..................................................... -- 38 38
Additional paid-in-capital.............................................. 363 135,709 136,072
Accumulated deficit..................................................... (10,386) (6,096) (16,482)
---------- --------- ---------
Total stockholders' equity........................................... 43,331 74,899 118,230
---------- --------- ---------

Total capitalization................................................. $ 218,331 $ 1,149 $ 219,480
---------- --------- ---------
---------- --------- ---------

DILUTION

On a pro forma basis as of December 31, 1998 after giving effect to the
restructuring and the issuance of the common and subordinated shares and
incentive rights, the tangible net book value of our assets would have been
approximately $114.6 million or $10.02 per common share, at an initial public
offering price of $20.00 per common share. The net tangible book value before
the offering does not include intangible assets with a book value of
$4.5 million. Pro forma net tangible book value per common share after the
offering is determined by dividing the total number of shares to be outstanding
after the offering made hereby into our pro forma net tangible book value, after
giving effect to the application of the net proceeds of the offering before
deducting expenses incurred in connection with this offering. The total number
of shares to be outstanding after the offering will amount to 7,600,000 common
shares, 3,800,000 subordinated shares and 38,000 incentive rights. For purposes
of the calculation, the net tangible book value after the offering does not
include intangible assets with a book value of $3.6 million. Purchasers of
common shares in the offering will experience substantial and immediate dilution
in tangible net book value per common share for financial accounting purposes,
as illustrated in the following table:

Initial public offering price per common share....................................... $20.00
Net tangible book value (deficit) per common share before the offering............. $(3.83)
Increase in net tangible book value per common share attributable to new
investors....................................................................... 13.85
------
Less: Pro forma net tangible book value per common share after the offering.......... 10.02
------
Immediate dilution in net tangible book value per common share to new investors...... $ 9.98
------
------

There could be additional future dilution if options are granted under the
new stock option plan described in "Management--New Share Option Plan."

The following table sets forth the number of shares that will be issued by
Statia Terminals Group and the total consideration to Statia Terminals Group
contributed by the purchasers of common shares in this offering upon the
consummation of the restructuring and the issuance of the common and
subordinated shares and incentive rights:

COMMON AND/OR
SUBORDINATED SHARES
AND/OR INCENTIVE
RIGHTS ISSUED CONSIDERATION
---------------------- --------------------------
NUMBER PERCENT AMOUNT PERCENT
----------- ------- ------------- -------

Existing shareholders......................... 3,838,000 33.55% $ 38,380 0.03%
New investors ................................ 7,600,000 66.45 152,000,000 99.97
----------- ------- ------------- -------
Total......................................... 11,438,000 100.00% $ 152,038,380 100.00%
----------- ------- ------------- -------
----------- ------- ------------- -------

This table assumes that the underwriters' over-allotment option is not exercised
and attributes a nominal value of $0.01 per incentive right to the incentive
rights.

CASH DISTRIBUTION POLICY
QUARTERLY DISTRIBUTIONS OF AVAILABLE CASH

We will make distributions to our shareholders for each of our fiscal
quarters prior to our liquidation in an amount equal to 100% of our available
cash, if any, for that quarter. We expect to make distributions of all available
cash within approximately 45 days after the end of each quarter, commencing with
the quarter ending June 30, 1999, to holders of record on the applicable record
date. We will adjust downward the target quarterly distributions and the
additional distributions levels for the period from the closing of this offering
through June 30, 1999 based on the actual length of that period.

The historical and pro forma cash generated during 1998 would not have been
sufficient to pay the target quarterly distribution during each quarter of 1998
on the number of shares that will be outstanding following this offering.

Available cash is defined in the glossary and generally means:

(1) all cash on hand

o at the end of any quarter; and

o borrowed after the end of that quarter for working capital purposes

less :

(2) the amount of cash reserves that is necessary or appropriate in the
reasonable discretion of our board of directors to:

o provide for the proper conduct of our business;

o comply with applicable law or any of our debt instruments or other
agreements; or

o provide funds for distributions for any one or more of the next four
fiscal quarters.

The reserves our board of directors may establish are not limited to reserves
under generally accepted accounting principles.

For each quarter during the subordination period, to the extent we have
enough available cash, a holder of common shares will have the right to receive
the target quarterly distribution, plus any common share arrearages, prior to
any distribution of available cash to the holders of subordinated shares. This
subordination feature will enhance our ability to make the target quarterly
distribution on the common shares during the subordination period.

Upon expiration of the subordination period, which generally will not occur
prior to June 30, 2004, all subordinated shares will be converted on a
one-for-one basis into common shares and will participate pro rata with all
other common shares in future distributions of available cash. Under particular
circumstances, up to 50% of the subordinated shares may convert into common
shares before the expiration of the subordination period. Common shares will not
accrue arrearages for distributions for any quarter after the end of the
subordination period.

DISTRIBUTIONS FROM OPERATING SURPLUS DURING SUBORDINATION PERIOD

We will make distributions of available cash from operating surplus, if
any, for any quarter during the subordination period in the following manner:

IN THIS ORDER

First, 100% to all common shares, pro rata

Second, 100% to all common shares, pro rata

Third, 100% to all subordinated shares, pro rata

After that, as described in "--Incentive Distributions."

IN THIS AMOUNT

On each common share, the target quarterly distribution for that quarter;

On each common share, the unpaid common share arrearages for all prior quarters
during the subordination period;

On each subordinated share, the target quarterly distribution for that quarter;
and

DISTRIBUTIONS FROM OPERATING SURPLUS AFTER SUBORDINATION PERIOD

We will make distributions of available cash from operating surplus, if
any, for any quarter after the subordination period in the following manner:

IN THIS ORDER

First, 100% to all common shares, pro rata

After that, as described in "--Incentive Distributions."

IN THIS AMOUNT

On each common share, the target quarterly distribution for that quarter; and

OPERATING SURPLUS AND INTERIM CAPITAL TRANSACTIONS

We will characterize cash distributions as distributions from either
operating surplus or interim capital transactions. This distinction affects the
amounts distributed to holders of common and subordinated shares relative to the
holders of incentive rights, and also determines whether holders of subordinated
shares receive any distributions.

Operating surplus means generally, for any period prior to liquidation on a
cumulative basis, the sum of:

o $7.5 million;

o any net positive working capital on hand on the closing of this offering;

o all cash receipts through the last day of that period, other than from
interim capital transactions, consisting primarily of cash from
operations and from working capital borrowings; and

o cash receipts after the end of that period from working capital
borrowings;

less

o all of our operating expenses through the last day of that period; and

o cash reserves for future operating expenses.

Interim capital transactions are:

o borrowings other than working capital borrowings;

o sales of equity securities; and

o sales of assets for cash that are outside the ordinary course of
business.

We will treat available cash paid as a distribution from any source as a
distribution from operating surplus until the sum of all distributions we have
made since the closing of this offering equals the operating surplus as of the
end of the quarter before that distribution. This method avoids the difficulty
of trying to determine whether a distribution is from operating surplus or from
interim capital transactions. We will deem any available cash in excess of that
amount, regardless of its source, to be from interim capital transactions, and
pay it accordingly.

If we make distributions of available cash from interim capital
transactions on each common share in an aggregate amount per common share equal
to the initial price of that common share, plus any common share arrearages, the
distinction between operating surplus and interim capital transactions will
cease. We will treat all distributions after that date as if they were from
operating surplus. We do not anticipate that we will make significant
distributions from interim capital transactions.

RESTRICTIONS ON DISTRIBUTIONS OF AVAILABLE CASH

Our ability to make distributions out of available cash to our shareholders
is generally subject to two sources of restrictions:

o restrictions imposed by the laws of the Netherlands Antilles, where we
are incorporated; and

o restrictions imposed by the indenture governing our operating
subsidiary's mortgage notes.

RESTRICTIONS IMPOSED BY NETHERLANDS ANTILLES LAW

Under Netherlands Antilles law, we may make distributions out of:

o profits; or

o reserves.

We establish profits at our annual general meeting of shareholders, to whom
we submit our financial statements for adoption. We may distribute this profit
or allocate it to reserves for later distribution, as long as our shareholder
equity exceeds the par value of our issued capital.

Also, we may declare and distribute one or more amounts as interim
dividends, to satisfy the target quarterly distribution, if at the time of
declaration we have a reasonable expectation that we will make enough profits
for the relevant financial year to justify the interim distribution.

RESTRICTIONS IMPOSED BY OUR OPERATING SUBSIDIARY'S INDENTURE

We are a holding company and depend entirely on dividends from our
subsidiary, Statia Terminals International, for our cash flow. The indenture
governing our subsidiary's mortgage notes prohibits it from paying a dividend to
us if:

o our subsidiary is or would be in default under the indenture;

o our subsidiary's consolidated fixed charge coverage ratio is less than
2.0 to 1; or

o the proposed dividend, together with any other restricted payments, would
be greater than our subsidiary's restricted payment availability, which
generally consists of 50% of its cumulative consolidated net income.

See "Restrictions on Distributions" for a more complete discussion of these
restrictions and their possible consequences.

SUBORDINATION PERIOD; CONVERSION OF SUBORDINATED SHARES

The subordination period will generally extend from the closing of this
offering until the tests set forth below have been met for any quarter ending on
or after June 30, 2004 for which:

(1) we have made distributions of available cash from operating surplus on the
common and subordinated shares for each of the three consecutive
non-overlapping four-quarter periods immediately preceding the date of
determination that equal or exceed the total target quarterly distribution
on all of the outstanding shares during those periods;

(2) we have generated adjusted operating surplus during each of the three
consecutive non-overlapping four-quarter periods immediately preceding the
date of determination that equals or exceeds the total target quarterly
distribution on all of the common and subordinated shares that were
outstanding on a fully diluted basis during those periods; and

(3) there are no outstanding common share arrearages.

Upon expiration of the subordination period, all remaining subordinated
shares will convert into common shares on a one-for-one basis and will
thereafter participate, pro rata, with the other common shares in distributions
of available cash.

Before the end of the subordination period, if we satisfy the tests for
ending subordination:

o for any quarter ending on or after June 30, 2002, one-quarter, or
950,000, of the subordinated shares will convert into common shares on a
one-to-one basis; and

o for any quarter ending on or after June 30, 2003, an additional quarter,
or 950,000, of the subordinated shares will convert into common shares on
a one-to-one basis.

However, the early conversion of the second one-quarter of subordinated shares
may not occur until at least one year following the early conversion of the
first one-quarter of subordinated shares.

"Adjusted operating surplus" for any period generally means:

(1) the operating surplus generated during that period;

less

(2) any net increase in working capital borrowings during that period, and

(3) any net reduction in cash reserves for operating expenditures during
that period not relating to an operating expenditure made during that
period;

plus

(4) any net decrease in working capital borrowings during that period, and

(5) any net increase in cash reserves for operating expenditures during
that period required by any debt instrument for the repayment of
principal, interest or premium.

Operating surplus generated during a period is equal to the difference
between:

(1) the operating surplus determined at the end of that period; and

(2) the operating surplus determined at the beginning of the period.

DEFERRAL OF DISTRIBUTIONS ON SUBORDINATED SHARES

We will defer making payment of the first $6.8 million of distributions
that would have otherwise been made on the subordinated shares until the end of
the deferral period. Except as set forth in the next paragraph, we will deem
these deferred distributions to have been made for the purposes of determining
available cash, operating surplus, adjusted operating surplus, additional
distribution levels, early conversion rights and the expiration of the
subordination period. We may use the deferred amounts during the deferral period
for any business purpose other than to make distributions on the subordinated
shares.

After the deferral period, we will pay to the subordinated shares, until
the deferred distributions have been paid in full, all available cash from
operating surplus remaining after all common share arrearages are paid, and the
target quarterly distribution is paid on all common and subordinated shares,
prior to any further distribution under the provisions set out herein.

The deferral period will generally extend from the closing of this offering
until the tests set forth below have been met for any quarter ending on or after
June 30, 2001 for which:

o we have made distributions of available cash from operating surplus on
the common and subordinated shares, including deferred distributions, for
each of the two consecutive non-overlapping four-quarter periods
immediately preceding the date of determination that equal or exceed the
sum of the target quarterly distribution on all of the outstanding shares
during those periods;

o we have generated the adjusted operating surplus during each of the two
consecutive non-overlapping four-quarter periods immediately preceding
the date of determination that equals or exceeds the sum of the target
quarterly distribution on all of the common and subordinated shares that
were outstanding on a fully diluted basis during those periods; and

o there are no outstanding common share arrearages.

Upon early conversion, we will reallocate pro rata any unpaid deferred
distributions allocable to the subordinated shares so converted to the remaining
unconverted subordinated shares.

INCENTIVE DISTRIBUTIONS

The incentive rights are non-voting shares which represent the right to
receive an increasing percentage of quarterly distributions of available cash
from operating surplus after the target quarterly distributions and the
additional distribution levels have been achieved. The additional distribution
levels are based on the amounts of available cash from operating surplus paid as
distributions in excess of the payments made for the target quarterly
distributions and common share arrearages, if any.

In order to be able to make incentive distributions for any quarter, we
first must distribute available cash from operating surplus:

o to the holders of common and subordinated shares in an amount equal to
the target quarterly distribution on all common and subordinated shares;
and

o to the holders of common shares in an amount equal to any unpaid common
share arrearages.

After we have satisfied these tests, we will make distributions of available
cash, if any, to the holders of common shares and subordinated shares and the
holders of incentive rights in the following manner:

IN THIS ORDER

First, 85% to all common and subordinated shares, pro rata, and 15% to the
incentive rights, pro rata

Second, 75% to all common and subordinated shares, pro rata, and 25% to the
incentive rights, pro rata

After that, 50% to all common and subordinated shares, pro rata, and 50% to the
incentive rights, pro rata

IN THIS AMOUNT

On each common and subordinated share, a total of $0.495, including the target
quarterly distribution, for that quarter. That amount is the "first additional
distribution";

On each common and subordinated share, a total of $0.675, including the target
quarterly distribution, for that quarter. That amount is the "second additional
distribution"; and

No maximum

DISTRIBUTIONS FROM INTERIM CAPITAL TRANSACTIONS

We will make distributions of available cash from interim capital
transactions in the following manner:

IN THIS ORDER

First, 100% to all common and subordinated shares, pro rata

Second, 100% to all common shares, pro rata

After that, all distributions of available cash from interim capital
transactions will be made as if they were from operating surplus

IN THIS AMOUNT

On each common share, distributions equal to the initial price;

On each common share, unpaid common share arrearages for all prior quarters
during the subordination period; and

No maximum

When we make a distribution of available cash from interim capital
transactions, we will adjust the target quarterly distribution and the
additional distribution levels downward by multiplying each such amount by a
fraction equal to:

(1) the initial price of the common shares reduced by that distribution,
and all prior distributions, of available cash from interim capital
transactions. This is the "unrecovered initial price;"

divided by

(2) the initial price, or the unrecovered initial price, as the case may
be, of the common shares immediately prior to that distribution of
available cash from interim capital transactions.

This adjustment to the target quarterly distribution may make it more
likely that subordinated shares will be converted into common shares, whether
upon the termination of the subordination period or the early conversion of some
subordinated shares, and may accelerate the dates at which those conversions
occur.

A "payback" of the initial price occurs when the unrecovered initial price
of the common shares is zero and any accrued common share arrearages have been
paid. At that time, the target quarterly distribution and each of the additional
distribution levels will have been reduced to zero for subsequent quarters. We
will then treat all distributions of available cash from all sources as if they
were paid from operating surplus. Because the target quarterly distribution and
the additional distribution levels will have been reduced to zero, the holders
of incentive rights will be entitled to receive 50% of all distributions of
available cash in addition to any distribution to which they may be entitled as
holders of common and subordinated shares.

Distributions of available cash from interim capital transactions will not
reduce the target quarterly distribution or additional distribution levels for
the quarter in which they are made.

ADJUSTMENT OF TARGET QUARTERLY DISTRIBUTION AND ADDITIONAL DISTRIBUTION LEVELS

We will reduce the target quarterly distribution and additional
distribution levels upon a distribution of available cash from interim capital
transactions. Also, if we effect a combination or subdivision of the common
shares, we will proportionately adjust the following amounts upward or downward,
as appropriate:

o the target quarterly distribution;

o the additional distribution levels;

o the unrecovered initial price;

o the number of additional common shares issuable during the subordination
period without a shareholder vote;

o the number of common shares issuable upon conversion of the subordinated
shares; and

o other amounts calculated on a per common and/or subordinated share basis.

For example, if we effect a two-for-one split of the common shares and
there are no prior adjustments, we will reduce each of the target quarterly
distributions, the additional distribution levels and the initial price of the
common shares to 50% of its initial level.

DISTRIBUTION OF CASH UPON LIQUIDATION

If we undergo a dissolution and liquidation, our assets will be sold or
otherwise disposed of. We will apply the proceeds of liquidation:

o first, to the payment of our creditors in the order of their priority;
and

o then, for distribution to the holders of common and subordinated shares
and the holders of incentive rights in order of their priority.

In liquidation, the holders of common shares will be entitled to receive
their unrecovered initial price and the target quarterly distribution due on
such common shares plus any unpaid common share arrearages before we make any
distributions to holders of subordinated shares.

If we liquidate before the end of the subordination period, we will apply
any distribution as follows:

IN THIS ORDER IN THIS AMOUNT

First, 100% to all common shares, pro rata On each common share, an amount equal to the sum of:

(1) the unrecovered initial price of that common
share;

(2) the amount of the target quarterly distribution
for the quarter during which our liquidation occurs;
and

(3) any unpaid common share arrearages on that common
share;

Second, 100% to all subordinated shares, pro rata On each subordinated share, an amount equal to the sum
of:

(1) the unrecovered initial price of that subordinated
share;

(2) the amount of the target quarterly distribution
for the quarter during which our liquidation occurs;
and

(3) any unpaid deferred distributions on that
subordinated share;

Third, 85% to all common and subordinated shares, pro On each common and subordinated share, an amount equal
rata, and 15% to the incentive rights, pro rata to:

(1) the cumulative excess per share of the first
additional distribution over the target quarterly
distribution for each quarter,
less

(2) the cumulative amount per share of any prior
distributions of available cash from operating surplus
in excess of the target quarterly distribution that we
paid 85% to the common and subordinated shares, pro
rata, and 15% to the incentive rights for each
quarter, pro rata;

Fourth, 75% to all common and subordinated shares, pro On each common and subordinated share, an amount equal
rata, and 25% to the incentive rights, pro rata to:

(1) the cumulative excess per share of the second
additional distribution over the first additional
distribution for each quarter,
less

(2) the cumulative amount per share of any prior
distributions of available cash from operating surplus
in excess of the first additional distribution that we
paid 75% to the common and subordinated shares, pro
rata, and 25% to the incentive rights for each
quarter, pro rata; and

After that, 50% to all common and subordinated shares, No maximum
pro rata, and 50% to the incentive rights, pro rata

RESTRICTIONS ON DISTRIBUTIONS

RESTRICTIONS IMPOSED BY NETHERLANDS ANTILLES LAW

Under Netherlands Antilles law, we may make one or more distributions to
our shareholders out of legally available funds. These distributions can be made
out of our profits or reserves. We establish profits at our annual general
meeting of shareholders after we prepare and submit the balance sheet and profit
and loss account to our shareholders. Upon adoption of these financial
statements at the annual general meeting of shareholders, the profit, if any, is
set as the positive balance of the profit and loss account, after allocation of
amounts to reserves or creation of one or more provisions. Our articles provide
that we may distribute such profit, as we deem fit. In addition, our articles
provide that we may allocate, in whole or in part, any profit amounts to the
profit reserves and make distributions therefrom, as well as to distribute out
of reserves.

Notwithstanding the above, we may declare and distribute one or more
interim distributions in the form of interim dividends, as an advance payment of
expected profits. We may make this declaration only if we have, at the time of
such declaration, the reasonable expectation that we will make sufficient
profits for the relevant financial year to justify the interim distributions.
However, at the time of the declaration of the interim distribution, we may
further determine that any amounts not covered by the profits shall be qualified
as distribution out of freely distributable reserves, if any, such as the
capital surplus, being the aggregate amounts paid in excess of the par value per
share by each holder of common or subordinated shares or incentive rights.

We may make the distribution out of profits and/or reserves generally to
shareholders insofar as our equity exceeds the nominal value of the issued and
outstanding capital. In addition, if the profits and loss account shows a loss
for any given year, and that loss cannot be covered by the reserves or
compensated in another manner, no profit can be distributed in any subsequent
year until that loss has been recovered or has been offset by reserves.

RESTRICTIONS IMPOSED BY INDENTURE

Statia Terminals Group is a holding company and depends entirely on
dividends from Statia Terminals International for its cash flow. Statia
Terminals International's ability to pay dividends to Statia Terminals Group is
subject to restrictions contained in the indenture relating to its mortgage
notes. Under the terms of the indenture, the payment by Statia Terminals
International of any dividend to Statia Terminals Group may not be made if at
the time of declaration:

o First, a default or event of default under the indenture shall have
occurred and be continuing or shall occur as a consequence thereof;

o Second, Statia Terminals International's consolidated fixed charge
coverage ratio for the prior four full fiscal quarters is less than 2.0
to 1; or

o Third, the amount of that dividend, when added to the aggregate amount of
all other dividends and other restricted payments made by Statia
Terminals International after November 27, 1996, exceeds the sum of:

(a) 50% of Statia Terminals International's cumulative consolidated
net income, from November 27, 1996 or, if cumulative consolidated
net income is a deficit, minus 100% of the deficit,

plus

(b) the net cash proceeds from the issuance and sale of Statia
Terminals International's capital stock.

With respect to the clause First above, such defaults or events of default
include:

o any breach of the indenture, including any failure to make any payments
on the mortgage notes,

o defaults on indebtedness of $2,500,000 or more in the aggregate;

o the obtaining of control of the board of directors of Statia Terminals
Group by any

person or group of persons acting together, other than our current
owners; and

o bankruptcy of any obligor on the mortgage notes.

There is no default or event of default under the indenture.

With respect to the clause Second above, for the four fiscal quarters ended
December 31, 1998, Statia Terminals International's consolidated fixed charge
coverage ratio was 2.0 to 1 on an historical basis and 2.7 to 1 on a pro forma
basis, assuming that this offering had closed at the beginning of such period.

With respect to the clause Third above:

o for the period from November 27, 1996 through December 31, 1998, Statia
Terminals International's consolidated net income was $0.6 million; and

o we expect to use $37.7 million of the net proceeds of this offering, or
$52.8 million if the underwriters exercise their over-allotment option in
full, to purchase additional capital stock of Statia Terminals
International.

Statia Terminals International has not paid any dividends and has not made any
other restricted payments, and has not received any proceeds from the sale of
capital stock, which would be included in the calculation pursuant to clause
Third above.

The redemption of approximately $33.8 million principal amount plus a
redemption premium of $4.0 million of the mortgage notes at 111.75% of the
principal amount from the proceeds of this offering, or $47.3 million principal
amount plus a redemption premium of $5.6 million if the underwriters exercise
their over-allotment option in full, will have a favorable impact on Statia
Terminals International's consolidated fixed charge coverage ratio. We currently
intend to redeem the remainder of the mortgage notes on or about November 15,
2000 at 105.875% of the principal amount and, therefore, eliminate at that time
the restrictions imposed by the indenture. We expect to fund that redemption
principally from a refinancing, which may include the issuance of new debt. We
can give no assurances that we will be able to issue such debt at that time or,
if we are able to, how favorable the terms of such issuance will be. It is
likely that new debt would also contain restrictions on payment of dividends
under specific circumstances.

Based on the foregoing we believe that, at least through November 15, 2000,
the indenture restrictions will permit Statia Terminals International to pay
sufficient dividends to Statia Terminals Group to cover at least the target
quarterly distribution that would be required to be made on the common and
subordinated shares out of available cash from operating surplus.

UNAUDITED PRO FORMA CONSOLIDATED CONDENSED FINANCIAL STATEMENTS

The following unaudited pro forma consolidated condensed balance sheet as
of December 31, 1998 was prepared to illustrate the estimated effects of:

o the disposition of Statia Terminals Southwest,
o the elimination of the Castle Harlan management fee,
o this offering,
o the use of the net proceeds from this offering as described under "Use of
Proceeds,"
o the restructuring, and
o the transfer of the shares of Petroterminal de Panama, currently owned by
us, to a newly-formed corporation owned by our current owners other than
Praxair,

(collectively, the "pro forma transactions") as if such transactions had
occurred on December 31, 1998. The following unaudited pro forma statement of
operations for the year ended December 31, 1998 was prepared to illustrate the
estimated effects of the pro forma transactions as if they had occurred as of
January 1, 1998.

The unaudited pro forma consolidated condensed financial statements should
be read in conjunction with "Management's Discussion and Analysis of Financial
Condition and Results of Operations," our financial statements and the notes
thereto, and the other financial information included elsewhere or incorporated
by reference in this prospectus. This pro forma financial information is
provided for informational purposes only and does not purport to be indicative
of the results of operations or financial position which would have been
obtained had the pro forma transactions been completed on the dates indicated or
the financial condition or results of operations for any future date or period.

UNAUDITED PRO FORMA CONSOLIDATED CONDENSED BALANCE SHEET
(DOLLARS IN THOUSANDS)

AS OF DECEMBER 31, 1998
-----------------------------------------
PRO FORMA
HISTORICAL ADJUSTMENTS PRO FORMA
---------- ----------- ---------

ASSETS:
Current assets:
Cash and cash equivalents...................................... $ 14,061 $ 137,000 (a) $ 10,574
(102,264)(b)
(33,750)(c)
(507)(d)
(3,966)(e)
Accounts receivable............................................
Trade, net................................................... 7,562 -- 7,562
Other........................................................ 2,328 -- 2,328
Inventory, net................................................. 4,528 -- 4,528
Prepaid expenses............................................... 1,417 (1,181)(f) 236
-------- --------- ---------
Total current assets......................................... 29,896 (4,668) 25,228
Property and equipment, net...................................... 209,970 -- 209,970
Other noncurrent assets, net..................................... 5,744 (1,130)(g) 3,614
(1,000)(h)
-------- --------- ---------
$245,610 $ (6,798) $ 238,812
-------- --------- ---------
-------- --------- ---------
LIABILITIES AND STOCKHOLDERS' EQUITY:
Current liabilities:
Accounts payable............................................... $ 9,306 $ -- $ 9,306
Accrued interest payable....................................... 2,027 (507)(d) 1,520
Other accrued expenses......................................... 15,946 (7,440)(b) 8,506
-------- --------- ---------
Total current liabilities.................................... 27,279 (7,947) 19,332
Long-term debt................................................... 135,000 (33,750)(c) 101,250
-------- --------- ---------
Total liabilities............................................ 162,279 (41,697) 120,582
-------- --------- ---------
Redeemable Preferred Stock Series A through C.................... 40,000 (40,000)(b) --
Preferred stock:
Preferred Stock Series D and E................................. 54,824 (54,824)(b) --
Notes receivable from stockholders............................. (1,474) -- (1,474)
Common stock..................................................... 4 (4)(a) --
Common shares.................................................... -- 76 (a) 76
Subordinated shares.............................................. -- 38 (a) 38
Additional paid-in-capital....................................... 363 136,890 (a) 136,072
(1,181)(f)
Accumulated deficit.............................................. (10,386) (3,966)(e) (16,482)
(1,000)(h)
(1,130)(g)
-------- --------- ---------
Total stockholders' equity................................... 43,331 74,899 118,230
-------- --------- ---------
$245,610 $ (6,798) $ 238,812
-------- --------- ---------
-------- --------- ---------

UNAUDITED PRO FORMA CONSOLIDATED CONDENSED STATEMENT OF OPERATIONS
(DOLLARS IN THOUSANDS EXCEPT SHARE AMOUNTS)

YEAR ENDED DECEMBER 31, 1998 (J)
---------------------------------------------------------------------
DISPOSITION
HISTORICAL ADJUSTMENTS SUBTOTAL OF STSW(N) PRO FORMA
---------- ----------- -------- ---------- ------------

Revenues........................................ $136,762 $ -- $136,762 $ (1,613) $ 135,149
Costs of services and products sold............. 106,688 -- 106,688 (1,674) 105,014
-------- ------- -------- -------- ------------
Gross profit.................................. 30,074 -- 30,074 61 30,135
Administrative expense.......................... 9,500 (1,350)(k) 8,150 -- 8,150
-------- ------- -------- -------- ------------
Operating income.............................. 20,574 1,350 21,924 61 21,985
Loss on disposition of property and equipment... 1,652 -- 1,652 (1,652) --
Interest expense................................ 16,851 (4,193)(l) 12,658 (7) 12,651
Interest income................................. 684 -- 684 -- 684
-------- ------- -------- -------- ------------
Income before provision for income taxes and
preferred stock dividends................... 2,755 5,543 8,298 1,720 10,018
Provision for income taxes...................... 320 -- 320 -- 320
-------- ------- -------- -------- ------------
Income before preferred stock dividends....... 2,435 5,543 7,978 1,720 9,698
Preferred dividends............................. 3,938 (3,938)(m) -- -- --
-------- ------- -------- -------- ------------
Net income (loss) available to holders of
common equity............................... $ (1,503) $ 9,481 $ 7,978 $ 1,720 $ 9,698
-------- ------- -------- -------- ------------
-------- ------- -------- -------- ------------
Pro forma diluted earnings per common and
subordinated share and incentive right(i):.... $ 0.85
------------
------------
Common and subordinated shares and incentive
rights outstanding in computing pro forma
diluted earnings per share:................... 11,438,000
------------
------------

- ------------------------

NOTES TO UNAUDITED PRO FORMA CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
(DOLLARS IN THOUSANDS EXCEPT SHARE AMOUNTS)

(a) Reflects the issuance of 7,600,000 common shares, $0.01 par value, 3,800,000
subordinated shares, $0.01 par value, and 38,000 incentive rights, $0.01 par
value, in connection with this offering at an initial public offering price
of $20 per common share. The estimated costs of this offering, including the
underwriting discount and estimated offering expenses and fees, totaling $15
million have been reflected as an offset to additional paid-in capital. The
resulting net cash proceeds of this offering total $137 million.

(b) Represents the retirement of Statia Terminals Group's Preferred Stock Series
A through Series E and accrued preferred stock dividends as of December 31,
1998.

(d) Represents the payment of accrued interest on 25% of Statia Terminals
International's mortgage notes.

(e) Represents a cash charge related to the early retirement of 25% of Statia
Terminals International's mortgage notes. This charge represents an
extraordinary loss on early retirement of debt; accordingly, this is not
reflected in the pro forma combined statements of operations.

(f) Represents the write-off of the balance of the prepaid Castle Harlan
management fee as of December 31, 1998.

(g) Represents the write-off of 25% of total capitalized bond issuance costs as
of December 31, 1998 related to Statia Terminals International's mortgage
notes. This charge represents an extraordinary loss on early retirement of
debt; accordingly, this is not reflected in the pro forma combined
statements of operations.

(h) Represents the transfer of the shares of Petroterminal de Panama to a
newly-formed corporation owned by the current owners of Statia Terminals
Group other than Praxair.

(i) Earnings per share data is not included on an historical basis as such
information would not be representative of the capital structure of Statia
Terminals Group after this offering.

(j) The following supplemental information is provided for EBITDA, historical
cash flows from operations and depreciation expense:

DISPOSITION
HISTORICAL ADJUSTMENTS SUBTOTAL OF STSW(O) PRO FORMA
---------- ----------- -------- ---------- ---------

EBITDA......................................... $ 30,116 $ 1,350(1) $ 31,466 $1,416 $32,882
Cash flow from operations...................... $ 18,190 N/A N/A N/A N/A
Depreciation................................... $ 10,510 $ -- $ 10,510 $ (297) $10,213

N/A Not applicable

EBITDA is defined as the sum of income before provision for income taxes and
preferred stock dividends, interest expense and depreciation.

(k) Represents the elimination of the Castle Harlan management fee payable by
Statia Terminals Group. The management fee will be eliminated in connection
with this offering (exclusive of certain expenses).

(l) Represents the reduction in interest expense and amortization of note
issuance costs resulting from the redemption of 25% of Statia Terminals
International's mortgage notes.

(m) Represents the elimination of preferred stock dividends resulting from the
retirement of Statia Terminals Group's Preferred Stock Series A through E.

(n) Reflects the exclusion of the operating results of Statia Terminals
Southwest.

SELECTED CONSOLIDATED FINANCIAL DATA

The following table sets forth selected financial data for the periods and
as of the dates indicated. In January 1996, our former parent, CBI Industries,
was acquired by Praxair. The statement of operations data for each of:

o the period from January 1, 1996 through November 27, 1996,
o the period from November 27, 1996 through December 31, 1996, and
o the years ended December 31, 1997 and 1998

have been derived from and are qualified by reference to, our audited
consolidated financial statements included elsewhere in this prospectus. The
statement of operations data for the years ended December 31, 1993, 1994 and
1995 have been derived from the audited combined financial statements of Statia
Terminals, Inc. and its subsidiaries and affiliates not included in this
prospectus. The summary historical consolidated financial data set forth below
should be read in conjunction with, and is qualified by reference to,
"Management's Discussion and Analysis of Financial Condition and Results of
Operations" and "Unaudited Pro Forma Consolidated Condensed Financial
Statements" and our consolidated financial statements and accompanying notes
thereto and other financial information included elsewhere in this prospectus.

(DOLLARS IN THOUSANDS EXCEPT SHARE AMOUNTS)
PRE-CASTLE HARLAN ACQUISITION
------------------------------------------- POST-CASTLE HARLAN ACQUISITION
PRE-PRAXAIR ACQUISITION ----------------------------------------
---------------------------- JANUARY 1, NOVEMBER 27,
1996 1996
YEAR ENDED DECEMBER 31, THROUGH THROUGH YEAR ENDED DECEMBER 31,
---------------------------- NOVEMBER 27, DECEMBER 31, --------------------------
1993 1994 1995(5) 1996(5) 1996(5) 1997 1998(6)
-------- -------- -------- ------------ ------------ ------------ ------------
STATEMENT OF OPERATIONS DATA:

Revenues............................. $112,076 $132,666 $135,541 $140,998 $ 14,956 $142,499 $136,762
Cost of services and products sold... 95,028 110,185 117,722 129,915 12,803 122,939 106,688
Gross profit......................... 17,048 22,481 17,819 11,083 2,153 19,560 30,074
Administrative expenses.............. 4,395 5,345 6,957 8,282 664 7,735 9,500
Operating income..................... 12,653 17,136 10,862 2,801 1,489 11,825 20,574
Loss (gain) on disposition of
property and equipment............. 7 (34) 59 (68) -- (109) 1,652
Interest expense..................... 726 3,114 4,478 4,187 1,613 16,874 16,851
Provision for income taxes........... 1,873 1,219 390 629 132 780 320
Net income (loss) available to common
stockholders....................... 10,046 10,944 4,569 (2,682) (522) (8,361) (1,503)
BALANCE SHEET DATA:
Total assets(1)...................... 186,420 197,357 230,283 N/M 260,797 246,479 245,610
Long-term debt....................... 59,843 56,400 51,600 N/M 135,000 135,000 135,000
Redeemable Preferred Stock Series A
through C.......................... -- -- -- N/M 40,000 40,000 40,000
Preferred Stock Series D and E(2).... -- -- -- N/M 61,000 61,000 54,824
Preferred stock...................... 11,212 18,057 18,589 N/M -- -- --
Total stockholders' equity........... 95,404 86,965 91,001 N/M 58,982 50,621 43,331
Net cash flow from (used in):
Operating activities................. (3,371) 25,706 11,476 9,108 2,235 9,770 18,190
Investing activities................. (23,355) (25,353) (36,908) (102,890) (178,033) (12,935) (4,092)
Financing activities................. 28,404 (1,679) 26,477 92,998 185,076 -- (6,150)
OPERATING DATA:
EBITDA(3)............................ 19,438 27,921 28,720 17,882 2,452 22,489 30,116
Consolidated fixed charge coverage
ratio under the indenture(4)....... -- -- -- -- 1.7x 1.5x 2.0x
Maintenance capital expenditures..... 7,791 6,867 9,975 12,887 1,203 4,401 9,000
Capacity (in thousands of barrels)... 11,590 15,387 20,387 20,387 20,387 20,387 19,566
Percentage capacity leased........... 79% 87% 76% 68% 74% 70% 91%
Throughput (in thousands of
barrels)........................... 37,591 60,630 109,805 81,994 13,223 118,275 119,502
Vessel calls......................... 967 1,063 973 922 108 1,030 1,027

- ------------------

N/M Not meaningful--various transactions occurred prior to and in anticipation
of the Castle Harlan acquisition which cause the balance sheet data as of
November 27, 1996 to be not meaningful in comparison to the other period end
dates presented. Therefore, the information is not presented.

(1) The decrease in total assets between December 31, 1996 and 1997 is
primarily the result of lower cash, accounts receivable, and inventory
balances and net property and equipment.

(Footnotes continued on next page)

(Footnotes continued from previous page)

(2) On July 29, 1998 a subsidiary of Statia Terminals International sold the
Brownsville facility and a payment of $6,150 was made from Statia
Terminals International to Statia Terminals Group for the redemption of a
portion of the Series D Preferred Stock.

(3) EBITDA is defined as the sum of (a) income before income tax provision
(benefit), (b) interest expense, (c) depreciation and amortization of
certain intangible assets and (d) the portion of First Salute lease
payments that represent interest expense for the periods prior to the
Castle Harlan acquisition. The amount of First Salute related interest
expense included in EBITDA was $5,741 for the year ended December 31,
1995, and $5,600 for the period ended November 27, 1996. Administrative
expenses include $3.0 million of non-cash, stock-based compensation
recognized on November 27, 1996 immediately prior to consummation of the
Castle Harlan acquisition. EBITDA is presented not as an alternative
measure of operating results or cash flow from operations (as determined
in accordance with generally accepted accounting principles), but rather
to provide additional information related to our debt servicing ability.

(4) The consolidated fixed charge coverage ratio is the ratio of adjusted
EBITDA to fixed charges; both computed as set forth in the indenture to
the mortgage notes. The indenture requires EBITDA for Statia Terminals
International to be adjusted for specified non-cash income and expense
items to compute adjusted EBITDA. The only such adjustment during the
period from November 27, 1996 through December 31, 1998 was the loss of
$1,652 from the sale of Statia Terminals Southwest which was excluded from
Statia Terminals International's adjusted EBITDA for the year ended
December 31, 1998. Adjusted EBITDA for Statia Terminals International also
excludes administrative expenses and the Castle Harlan management fee
incurred by Statia Terminals Group N.V. These administrative expenses and
the Castle Harlan management fee were $121, $1,285 and $2,089 for the
period from November 27, 1996 through December 31, 1996 and the years
ended December 31, 1997 and 1998, respectively. Statia Terminals
International's ability to pay dividends is restricted by the indenture to
the mortgage notes which generally requires, among other things, that it
pay dividends only when its consolidated fixed charge ratio is at least 2
to 1. A fixed charge coverage ratio of less than 2 to 1 also limits the
amount of indebtedness Statia Terminals International may incur.

(5) Prior to January 12, 1996, we were a wholly owned subsidiary of
CBI Industries. On January 12, 1996, pursuant to the merger agreement
dated December 22, 1995, CBI Industries became a wholly owned subsidiary
of Praxair. This transaction was reflected in our consolidated financial
statements as a purchase, effective January 1, 1996. On November 27, 1996,
Castle Harlan, members of our management and others acquired us from
Praxair. This transaction is reflected in our consolidated financial
statements effective November 27, 1996 as a purchase. The application of
purchase accounting at each acquisition date resulted in changes to the
historical cost basis of accounting for certain assets. Accordingly, the
information provided for periods before and after each of these
transactions is not comparable.

(6) Includes the operations of Statia Terminals Southwest through June 30,
1998.

MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS

For purposes of the discussion below, reference is made to our consolidated
balance sheets as of December 31, 1997 and 1998, and our consolidated income and
cash flow statements for the period January 1, 1996 through November 27, 1996,
after our acquisition by Praxair. Reference is also made to our consolidated
income and cash flow statements for the period November 27, 1996 through
December 31, 1996, after the acquisition by Castle Harlan, our management and
others, and the years ended December 31, 1997 and 1998. We prepare our financial
statements in accordance with U.S. generally accepted accounting principles.

To facilitate a meaningful discussion of our comparative operating
performance for the years ended December 31, 1996, 1997 and 1998, this
"Management's Discussion and Analysis of Financial Condition and Results of
Operations" presents financial information on a traditional comparative basis
for all periods unless otherwise indicated. Consequently, the information
presented below for the year ended December 31, 1996 does not necessarily comply
with the accounting requirements for companies subject to major acquisitions.
Generally accepted accounting principles in the U.S. call for the separate
reporting of our new company, after the Castle Harlan acquisition, and our
predecessor company, both before and after the Praxair acquisition. The solid
black lines in some of the tables separates financial information that may not
be comparable across periods.

Substantially all of our transactions are denominated in U.S. dollars. All
figures are in U.S. dollars unless otherwise indicated.

OVERVIEW OF OPERATIONS

We began our operations in 1982 as Statia Terminals N.V., a Netherlands
Antilles corporation, operating an oil products terminal located on the island
of St. Eustatius. In 1984, CBI Industries, an industrial gases and contracting
services company, acquired a controlling interest in Statia Terminals N.V. In
1986, Statia Terminals N.V. purchased Statia Terminals Southwest, with its
facility at Brownsville, Texas. In 1990, CBI Industries became the sole owner of
Statia Terminals N.V. and Statia Terminals Southwest. In 1993, we acquired full
control of Statia Terminals Point Tupper, Incorporated, located at Point Tupper,
Nova Scotia.

In January 1996, Praxair acquired CBI Industries. In November 1996, Castle
Harlan, our management and others acquired from Praxair all of the outstanding
capital stock of Statia Terminals N.V., Statia Terminals, Inc., their
subsidiaries and certain of their affiliates. Castle Harlan is a private equity
investment fund managed by Castle Harlan, Inc., a private merchant bank. At the
same time, Statia Terminals Point Tupper was amalgamated into Statia Terminals
Canada. Statia Terminals Canada and Statia Terminals International were
organized for purposes of facilitating the Castle Harlan acquisition. In July
1998, we sold Statia Terminals Southwest to an unaffiliated third party
purchaser.

During 1992, we invested in additional terminal facilities located at Point
Tupper, Nova Scotia. We completed refurbishment of this 7.4 million barrel
facility during 1994. The total capital investment was $74.1 million. At St.
Eustatius during the fourth quarter of 1993, we commenced construction of five
million barrels of crude oil storage and a single point mooring buoy, which was
completed and leased during the first quarter of 1995, with a total capital
investment of $107.5 million. Over the three-year period from 1993 to 1995, we
added crude oil storage and related services to our established fuel oil,
petroleum products, and other services. In addition to blending and other
ancillary services, we added marine emergency response services at each of our
facilities and added limited refining capability through our atmospheric
distillation unit at St. Eustatius during 1995. Finally, during the fourth
quarter of 1995 and the first quarter of 1996, we made investments in a heating
system and butane sphere at Point Tupper. These additions to capacity have led
to more throughput and, therefore, higher revenues from storage, throughput and
ancillary services. We did not make significant investments to expand our
operating capacity during 1997 and 1998.

The operations at St. Eustatius suffered damages from Hurricanes Iris, Luis
and Marilyn, causing closure of the terminal for approximately three weeks at
the end of the third quarter of 1995. Repair of damages caused by these
hurricanes and installation of some improvements were substantially completed by
the end of the third quarter of 1996. We spent $20.6 million on repairs and
improvements related to the hurricanes, $6.8 million of which was capitalized as
property and equipment. Claims related to the hurricanes were filed with
insurance carriers and ultimately settled for $12.6 million.

During September 1998, Hurricane Georges damaged the St. Eustatius
facility. Hurricane Georges did not significantly impact operations of the
facility which returned to normal within days of the storm. The preliminary
estimate of the damage to the facility is $5.8 million. Insulation on certain

storage tanks, electrical transmission systems and roofs of several buildings
sustained damage. In advance of the storm, on September 19, 1998, the facility
ceased terminal operations and instituted its hurricane preparation and damage
prevention plan. The terminal returned to full operations by September 29, 1998.
During the third quarter of 1998, we recorded a charge of $0.8 million
representing an insurance deductible of $0.5 million related to the hurricane
damage and other costs resulting from the hurricane which we anticipate will not
be recovered through our insurance policies.

The following table sets forth for the periods indicated total capacity,
capacity leased, throughput and vessel calls for each of our operating
locations. "Total capacity" represents the average storage capacity available
for lease for a period. "Capacity leased" represents the storage capacity leased
to third parties weighted for the number of days leased in the month divided by
the capacity available for lease. "Throughput" volume is the total number of
inbound barrels discharged from a vessel, tank, rail car or tanker truck, not
including across-the-dock or tank-to-tank transfers. A "vessel call" occurs when
a vessel docks or anchors at one of our terminal locations in order to load
and/or discharge cargo and/or to take on bunker fuel. Such dockage or anchorage
is counted as one vessel call regardless of the number of activities carried on
by the vessel. A vessel call also occurs when we sell and deliver bunker fuel to
a vessel not calling at our terminals for the above purposes. Each of these
statistics is a measure of the utilization of our facilities.

CAPACITY, CAPACITY LEASED, THROUGHPUT AND VESSEL CALLS BY LOCATION
(CAPACITY AND THROUGHPUT IN THOUSANDS OF BARRELS)

FOR THE YEAR ENDED
DECEMBER 31,
-----------------------------
1996 1997 1998
------- ------- -------

Netherlands Antilles and the Caribbean
Total capacity................................................................. 11,334 11,334 11,334
Capacity leased................................................................ 80% 76% 92%
Throughput..................................................................... 69,395 62,944 74,158
Vessel calls................................................................... 880 792 864
Canada
Total capacity................................................................. 7,404 7,404 7,404
Capacity leased................................................................ 55% 70% 93%
Throughput..................................................................... 23,350 53,011 43,468
Vessel calls................................................................... 62 125 104
Texas
Total capacity................................................................. 1,649 1,649 N/M
Capacity leased................................................................ 52% 31% N/M
Throughput..................................................................... 2,472 2,320 N/M
Vessel calls................................................................... 88 113 N/M
All locations (1)
Total capacity................................................................. 20,387 20,387 19,556
Capacity leased................................................................ 69% 70% 91%
Throughput..................................................................... 95,217 118,275 119,502
Vessel calls................................................................... 1,030 1,030 1,027

- ------------------
(1) The Brownsville, Texas facility was sold on July 29, 1998. The statistics
above include the operations of the Brownsville facility through June 30,
1998.

N/M: Not meaningful

A majority of our revenues are generated by bunker and bulk product sales
which fluctuate with global oil prices. As a result, we experience volatility in
our revenue stream, which is not necessarily indicative of our profitability.

Gross profits from terminaling services are generally higher than gross
profits from bunker and bulk product sales. Our operating costs for terminaling
services are relatively fixed and generally do not change significantly with
changes in capacity leased. Additions or reductions in storage, throughput and
ancillary service revenues directly impact our operating income. Costs for the
procurement of bunker fuels and bulk petroleum products are variable and linked
to global oil prices. Our bunker and bulk product costs are also impacted by
market supply conditions, types of products sold and volumes delivered.

In addition, our operating costs are impacted by inflationary cost
increases, changes in storage capacity and changes in additional ancillary
services offered by us.

RESULTS OF OPERATIONS

The following table sets forth, for the periods indicated, the percentage
of revenues represented by some items in our consolidated income statements.

RESULTS OF OPERATIONS
(DOLLARS IN THOUSANDS)

FOR THE YEARS ENDED DECEMBER 31,
-------------------------------------------------------------
1996 1997 1998
------------------- ------------------ ------------------
% OF % OF % OF
DOLLARS REVENUES DOLLARS REVENUES DOLLARS REVENUES
-------- -------- -------- -------- -------- --------

Revenues:
Terminaling services................................... $ 49,812 31.9% $ 53,165 37.3% $ 66,625 48.7%
Bunker and bulk product sales.......................... 106,142 68.1% 89,334 62.7% 70,137 51.3%
-------- ------ -------- ------ -------- ------
Total revenues....................................... 155,954 100.0% 142,499 100.0% 136,762 100.0%
Cost of services and products sold..................... 142,718 91.5% 122,939 86.3% 106,688 78.0%
-------- ------ -------- ------ -------- ------
Gross profit......................................... 13,236 8.5% 19,560 13.7% 30,074 22.0%
Administrative expenses................................ 8,946 5.7% 7,735 5.4% 9,500 6.9%
-------- ------ -------- ------ -------- ------
Operating income..................................... 4,290 2.8% 11,825 8.3% 20,574 15.0%
Loss (gain) on dispositions of property and
equipment............................................ (68) -- (109) (0.1)% 1,652 1.2%
Interest expense....................................... 5,800 3.7% 16,874 11.8% 16,851 12.3%
Interest income........................................ 97 0.1% 555 0.4% 684 0.5%
-------- ------ -------- ------ -------- ------
Income (loss) before income taxes...................... (1,345) (0.8)% (4,385) (3.0)% 2,755 2.0%
Provision for income taxes............................. 761 0.5% 780 0.5% 320 0.2%
Preferred stock dividends.............................. 1,098 0.7% 3,196 2.2% 3,938 2.9%
-------- ------ -------- ------ -------- ------
Net income (loss) available to common stockholders... $ (3,204) (2.0)% $ (8,361) (5.7)% $ (1,503) (1.1)%
-------- ------ -------- ------ -------- ------
-------- ------ -------- ------ -------- ------

The following tables set forth for the periods indicated (a) the total
revenues and total operating income (loss), after allocation of administrative
expenses, at each of our operating locations and (b) the percentage such revenue
and operating income (loss) relate to our total revenue and operating income.
You should note that we sold our Brownsville, Texas facility on July 29, 1998,
and the figures above and below and our consolidated financial statements
include the Brownsville facility through June 30, 1998.

REVENUES BY LOCATION
(DOLLARS IN THOUSANDS)

FOR THE YEARS ENDED DECEMBER 31,
-------------------------------------------------------------
1996 1997 1998
------------------- ------------------ ------------------
% OF % OF % OF
DOLLARS TOTAL DOLLARS TOTAL DOLLARS TOTAL
-------- -------- -------- -------- -------- --------

Netherlands Antilles and the Caribbean................. $139,751 89.6% $122,042 85.6% $114,091 83.4%
Canada................................................. 13,355 8.6% 18,586 13.0% 21,058 15.4%
Brownsville, Texas facility............................ 2,848 1.8% 1,871 1.4% 1,613 1.2%
-------- ------ -------- ------ -------- ------
Total................................................ $155,954 100.0% $142,499 100.0% $136,762 100.0%
-------- ------ -------- ------ -------- ------
-------- ------ -------- ------ -------- ------

OPERATING INCOME (LOSS) BY LOCATION
(DOLLARS IN THOUSANDS)

FOR THE YEARS ENDED DECEMBER 31,
---------------------------------------------------------------
1996 1997 1998
-------------------- ------------------ ------------------
% OF % OF % OF
DOLLARS TOTAL DOLLARS TOTAL DOLLARS TOTAL
--------- -------- -------- -------- -------- --------

Netherlands Antilles and the Caribbean................ $ 6,826 159.1 % $ 10,301 87.1 % $ 14,442 70.2 %
Canada................................................ (1,177) (27.4)% 3,539 29.9 % 6,625 32.2 %
Brownsville, Texas facility........................... (1,359) (31.7)% (2,015) (17.0)% (493) (2.4)%
--------- ------ -------- ------ -------- ------
Total............................................... $ 4,290 100.0 % $ 11,825 100.0 % $ 20,574 100.0 %
--------- ------ -------- ------ -------- ------
--------- ------ -------- ------ -------- ------

YEAR ENDED DECEMBER 31, 1998 COMPARED WITH YEAR ENDED DECEMBER 31, 1997

Comparability

On July 29, 1998, we sold Statia Terminals Southwest to an unrelated
third-party. Our consolidated financial statements include the operations of
Statia Terminals Southwest through June 30, 1998. Therefore, the year ended
December 31, 1997 includes the operations of Statia Terminals Southwest for six
months more than the same period in 1998. Some pro forma information related to
the sale of Statia Terminals Southwest is presented in the unaudited pro forma
consolidated condensed financial statements included elsewhere in this
prospectus.

Revenues

Total revenues for the year ended December 31, 1998 were $136.8 million
compared to $142.5 million for the year ended December 31, 1997, a decrease of
$5.7 million, or 4.0%.

Revenues from terminaling services, which consist of storage, throughput,
dock charges, emergency response fees and other terminal charges, for the year
ended December 31, 1998 were $66.6 million compared to $53.2 million for the
previous year, an increase of $13.4 million, or 25.3%. The improvement in
terminaling services revenue for the year ended December 31, 1998 compared to
the previous year was principally due to:

o our ability to attract additional long term customers who use our
facilities as part of their strategic distribution networks;
o additional vessel calls at St. Eustatius resulting in higher dock charges
and emergency response fees; and
o the contango conditions in the international petroleum markets.

Revenues from terminaling services at St. Eustatius increased approximately
$8.7 million, or 24.2%, during the year ended December 31, 1998 as compared to
the year ended December 31, 1997. Total throughput increased from 62.9 million
barrels during the year ended December 31, 1997 to 74.2 million barrels during
the same period of 1998 due primarily to higher throughput of fuel oil and
petroleum products, and was partially offset by reduced throughput of crude oil.
Seventy-two more vessels called at the St. Eustatius facility during the year
ended December 31, 1998 than during the same period of 1997, resulting in higher
revenues from dock charges and stand-by emergency response fees. For the year
ended December 31, 1998, the overall percentage of capacity leased at this
facility was 92% compared to 76% for the same period of 1997, reflecting
increases in the percentage of capacity leased for fuel oil tankage and
petroleum products.

Revenues from terminaling services at Point Tupper increased $5.1 million,
or 32.6% during the year ended December 31, 1998 as compared to the year ended
December 31, 1997. The percentage of tank capacity leased at Point Tupper
increased from 70% for the year ended December 31, 1997 to 93% for the same
period of 1998. This increase was primarily the result of additional crude oil
and clean petroleum products tankage leased during the year ended December 31,
1998 as compared to the same period of 1997. Fewer vessel calls led to lower
port charge revenues at this facility during the year ended December 31, 1998 as
compared to the same period of 1997.

Revenues from bunker and bulk product sales were $70.1 million for the year
ended December 31, 1998 compared to $89.3 million for the same period in 1997, a
decrease of $19.2 million, or 21.5%. The decrease was primarily due to lower
comparative selling prices for bunker fuels reflecting current market
conditions. Average selling prices decreased 30.2% when comparing the year ended
December 31, 1998 with the same period of 1997. However, metric tons of bunkers
and bulk product sold increased 13.6% during the year ended December 31, 1998 as
compared to the same period of 1997.

Gross Profit

Gross profit for the year ended December 31, 1998 was $30.1 million
compared to $19.6 million for the same period of 1997, representing an increase
of $10.5 million, or 53.3%. The increase in gross profit is primarily the result
of the increased terminaling services revenue produced at a small incremental
cost. Additionally, we realized higher gross margins on bunker sales during the
year ended December 31, 1998 as compared to the same period of 1997 due to
higher volumes of bunker fuels delivered.

Administrative Expenses

Administrative expenses were $9.5 million for the year ended December 31,
1998 as compared to $7.7 million for the same period of 1997, representing an
increase of $1.8 million, or 22.8%. The increase during the year ended December
31, 1998, as compared to the same period of 1997, is primarily the result of
higher personnel costs and some professional fees.

Loss on Sale of Assets

As more fully discussed in note 15 of notes to the consolidated financial
statements, we recognized a loss on the sale of Statia Terminals Southwest
during the year ended December 31, 1998 of $1.7 million.

Interest Expense

During the years ended December 31, 1997 and 1998, we incurred
$16.9 million of interest expense from interest accrued on our mortgage notes
due in 2003, amortization expense related to deferred financing costs and bank
charges.

Preferred Stock Dividends

Preferred stock dividends were $3.9 million for the year ended
December 31, 1998 as compared to $3.2 million for the same period of 1997,
representing an increase of $0.7 million, or 23.2%. Preferred stock dividends
have been computed and accrued but not paid on Statia Terminals Group's
Series A, B and C Preferred Stock. The increase during the year ended
December 31, 1998 as compared to the same period of 1997 is the result of the
increasing balance of dividends payable and a rate increase.

Net Loss

Net loss available to common stockholders was $1.5 million for the year
ended December 31, 1998 as compared to a net loss of $8.4 million for the same
period of 1997, an improvement of $6.9 million. The decrease in the net loss is
attributable to the net effect of the factors discussed above.

YEAR ENDED DECEMBER 31, 1997 COMPARED WITH YEAR ENDED DECEMBER 31, 1996

Comparability

Gross profit, operating income and net income (loss) for the years ended
December 31, 1997 and 1996 are not comparable due to the effects of purchase
accounting applied as a result of the Castle Harlan acquisition and the effects
of the acquisition of the First Salute assets, discussed in note 9 of notes to
the consolidated financial statements. Depreciation, amortization and other
operating expenses, which are components of gross profit, changed due to
revaluation of various assets to their fair values at the date of such
acquisition. Changes in components of our debt and equity accounts resulted in
changes to interest expense, dividends and costs of services and products sold.

Revenues

Total revenues for the year ended December 31, 1997 were $142.5 million
compared to $156.0 million for the year ended December 31, 1996, a decrease of
$13.5 million, or 8.6%.

Revenues from terminaling services for the year ended December 31, 1997
were $53.2 million compared to $49.8 million for the previous year, an increase
of $3.4 million, or 6.7%. Increased revenues from terminaling services at Point
Tupper were partially offset by lower revenues from terminaling services at
St. Eustatius.

Revenues from terminaling services at St. Eustatius decreased
$1.9 million, or 5.1%, during the year ended December 31, 1997 as compared to
the year ended December 31, 1996. Lower crude oil throughput and reductions in
the percentage of capacity leased for clean petroleum products resulted in lower
1997 revenues from storage, throughput and ancillary services. A customer
occupied all of the petroleum products storage for three-quarters of the 1996
year while the petroleum products tankage went essentially unleased for the 1997
year.

Revenues from terminaling services at Point Tupper increased $6.6 million,
or 73.1% during the year ended December 31, 1997 as compared to the year ended
December 31, 1996. Incremental spot storage leases for crude oil from our
primary Canadian customer, Tosco, crude oil and petroleum products leases from
several new customers, plus 30 million barrels, or 127%, of increased throughput
from 1996 and additional ancillary services, contributed to the higher revenues
from terminaling services. Additionally, some unleased tankage was converted
from petroleum product storage to crude oil storage to meet customer demand.

Revenues from bunker and bulk product sales fell $16.8 million, or 15.8%,
to $89.3 million for the year ended December 31, 1997 from $106.1 million for
the same period in 1996. The drop is primarily attributable to increased
competition from elsewhere in the Caribbean, the U.S. Gulf coast and other ports
resulting in lower volumes of bunker fuel delivered and fewer bulk product
sales. At St. Eustatius, the volume of bunker fuels delivered fell 12.9%.
Comparative average selling prices year-to-year were virtually unchanged. At
Point Tupper, we were unable to expand our bunker sales business initiated in
1996 due to our inability to find an adequate source of supply.

Our Brownsville, Texas facility, which we sold on July 29, 1998,
experienced a reduction in total revenues due to the loss of storage business
for gasoline and diesel fuels and vegetable oils primarily to competing
facilities in the region. Statia Terminal Southwest's revenues were
$1.9 million for the year ended December 31, 1997, down $0.9 million or 28.3%,
from $2.8 million for the same period in 1996.

Gross Profit

Gross profit for the year ended December 31, 1997 was $19.6 million
compared to $13.2 million for the year ended December 31, 1996 representing an
increase of $6.4 million, or 48.5%. During the period from January 1, 1996
through November 27,

1996, lease expenses related to First Salute of $5.6 million consisting
primarily of interest were included in cost of services and products sold. This
lease was fully satisfied in connection with the Castle Harlan acquisition.
Additionally, the increased terminaling services revenue positively impacted our
gross profit.

Administrative Expenses

Administrative expenses were $7.7 million for the year ended December 31,
1997 as compared to $8.9 million for the year ended December 31, 1996,
representing a decrease of $1.2 million, or 13.5%. For the year ended
December 31, 1996, administrative expenses included $3.0 million of non-cash
stock based compensation awarded to some of our managers in connection with the
Praxair and Castle Harlan acquisitions. Exclusive of the non-recurring stock
based compensation, selling and administrative expenses increased from year-to-
year primarily due to higher personnel costs.

Interest Expense

Since the Castle Harlan acquisition in November 1996, our interest expense
has related to interest accrued on our mortgage notes due 2003, amortization
expense related to deferred financing costs and bank charges. For the year ended
December 31, 1997, interest expense amounted to $16.9 million. For the year
ended December 31, 1996, interest expense was $5.8 million which included
expenses related to:

o the mortgage notes due 2003,
o third party debt obligation, net of amounts charged to capital projects,
o the effects of an interest rate swap,
o amortization expense related to deferred financing costs, and
o bank charges.

Preferred Stock Dividends

Preferred stock dividends were $3.2 million for the year ended
December 31, 1997 as compared to $1.1 million for the year ended December 31,
1996. Preferred stock dividends subsequent to November 27, 1996 represent
amounts accrued but not paid on Statia Terminals Group's Series A, B and C
Preferred Stock and related dividend payable balances. Preferred stock dividends
for the year ended December 31, 1996 are not comparable to those incurred for
the year ended December 31, 1997 due to changes in Statia Terminals Group's
capital structure resulting from the Praxair and Castle Harlan acquisitions.

Net Loss

Net loss available to common stockholders was $8.4 million for the year
ended December 31, 1997 as compared to $3.2 million for the year ended
December 31, 1996, representing an increase of $5.2 million. The increase in the
net loss is attributable to the net effect of the factors discussed above.

SELECTED QUARTERLY FINANCIAL INFORMATION

Our 1998 operating income and EBITDA increased quarter over quarter in 1998
and for each quarter of 1998 compared to the same quarters in 1997, except for
the second quarter of 1998, when we took a non-cash charge of $4.0 million from
the loss on a sale of property. This trend is a result of our entering into
additional long term contracts over the two-year period resulting in higher
capacity leased, increased volumes of bunker fuel delivered due, in part, to
reduced competition, and additional revenues from ancillary services due to
higher terminal activity.

The following table sets forth selected unaudited quarterly operating
results for each of our last eight quarters. This information was prepared by us
on a basis consistent with our audited financial statements and includes all
adjustments, consisting of normal and recurring adjustments, that we consider
necessary for a fair presentation of the data. During the second quarter of
1998, we recorded a non-cash charge of $4.0 million from the loss on a sale of
property, of which $2.3 million was reversed during the fourth quarter. These
quarterly results are not necessarily indicative of future results of
operations. This information should be read in conjunction with our consolidated
financial statements and notes thereto included elsewhere in this prospectus.

QUARTERS ENDED TOTAL
------------------------------------------------------- --------
MARCH 31 JUNE 30 SEPTEMBER 30 DECEMBER 31
--------- --------- ------------- ------------

1997
Total revenues.................................. $32,709 $33,148 $35,333 $ 41,309 $142,499
Operating income................................ 2,394 2,508 2,439 4,484 11,825
EBITDA.......................................... 4,986 5,115 4,896 7,492 22,489
1998
Total revenues.................................. $30,364 $36,472 $32,699 $ 37,227 $136,762
Operating income................................ 2,999 5,231 5,635 6,709 20,574
EBITDA.......................................... 5,804 4,082 8,373 11,857 30,116

LIQUIDITY AND CAPITAL RESOURCES--SUBSEQUENT TO THE CASTLE HARLAN ACQUISITION

Cash Flow from Operating Activities

Net cash provided by operating activities was $18.2 million and
$9.8 million for the years ended December 31, 1998 and 1997 and $2.2 million for
the period from November 27, 1996 through December 31, 1996, respectively. Cash
flow from operations has been our primary source of liquidity during the periods
subsequent to the Castle Harlan acquisition. Differences between net losses and
positive operating cash flow have resulted primarily from depreciation and
amortization burdens and changes in various asset and liability accounts.
Additionally, during the year ended December 31, 1998, we recognized a
$1.7 million non-cash loss on the sale of Statia Terminals Southwest. See
note 15 of notes to consolidated financial statements for more information on
the sale of Statia Terminals Southwest.

At December 31, 1997, we had cash and cash equivalents on hand of
$6.1 million compared to $14.1 million at December 31, 1998.

Cash Flow from Investing Activities

Net cash used in investing activities was $4.1 million and $12.9 million
for the years ended December 31, 1998 and 1997 and $178.0 million for the period
from November 27, 1996 through December 31, 1996, respectively. Investing
activities during 1998 and 1997 and the period ended December 31, 1996 included
purchases of property and equipment of $10.7 million, $5.3 million and
$1.2 million, respectively. Additionally, as more fully discussed in note 15 of
notes to consolidated financial statements, on July 29, 1998, we received
$6.5 million of cash proceeds from the sale of our Brownsville, Texas facility.

During the year ended December 31, 1997 and the period ended December 31,
1996, we spent $7.7 million and $176.8 million, respectively, related to the
Castle Harlan acquisition. These amounts include:

o approximately $175.1 million in cash paid to Praxair, of which
$170.0 million was paid at closing and $5.1 million was paid in February
1997, to satisfy the cash portion of the purchase price, and

o $9.4 million of commissions, fees and expenses.

Cash Flow from Financing Activities

During the year ended December 31, 1998 we utilized the net proceeds from
the sale of the Brownsville, Texas facility to retire $6.15 million of Statia
Terminals Group's Series D Preferred Stock.

As part of the Castle Harlan acquisition, we issued $135.0 million of
mortgage notes, received proceeds of $56.5 million from the issuance of
preferred and common stock and paid $6.4 million of debt costs. The net cash
proceeds from these transactions were substantially used as described above in
"--Cash Flow from Investing Activities".

In connection with the Castle Harlan acquisition prior to November 27, 1996
all of our third-party indebtedness, including an off-balance sheet lease
obligation, bank debts, preferred stock from a former affiliate and advances
from Praxair, was repaid. In addition, on November 27, 1996, we entered into a
new $17.5 million revolving credit facility secured by our accounts receivable
and oil inventory. The revolving credit facility is available for working
capital needs and letter of credit financing, and it permits us to borrow in
accordance with our available borrowing base which was estimated at
$8.0 million as of December 31, 1998 and at March 31, 1999. No draws on the
revolving credit facility have occurred. The revolving credit facility bears
interest at the prime rate plus 0.50% per annum (8.25% at December 31, 1998) and
will expire on November 27, 1999.

The debt service costs associated with the borrowings under the mortgage
notes have significantly increased liquidity requirements. The mortgage notes
accrue interest at 11 3/4% per annum payable semi-annually on May 15 and
November 15. The mortgage notes will mature on November 15, 2003. The mortgage
notes are redeemable in whole or in part at the option of Statia Terminals
International at any time on or after November 15, 2000 at redemption prices set
forth in the indenture relating to the mortgage notes. The mortgage notes may be
redeemed or purchased prior to November 15, 2000 in specific circumstances as
defined in the indenture relating to the mortgage notes.

The indenture generally limits the incurrence of additional debt by Statia
Terminals International, limits the ability of Statia Terminals International to
pay Statia Terminals Group dividends or make any other distribution to Statia
Terminals Group, and limits the ability of Statia Terminals International to
sell its assets. We may incur additional indebtedness as long as our fixed
charge coverage ratio is greater than 2.0 to 1. The fixed charge coverage ratio
is the ratio of adjusted EBITDA to fixed charges, each computed as set forth in
the indenture with respect to the mortgage notes. The indenture requires EBITDA
for Statia Terminals International to be adjusted for specified non-cash income
and expense items to compute adjusted EBITDA. Adjusted EBITDA for Statia
Terminals

International also excludes administrative expenses and the Castle Harlan
management fee incurred by Statia Terminals Group. Under the terms of the
indenture, Statia Terminals International may not pay Statia Terminals Group any
dividend if at the time of declaration:

o a default or event of default under the indenture shall have occurred and
be continuing or shall occur as a consequence thereof;

o Statia Terminals International's consolidated fixed charge coverage ratio
(as defined in the indenture) for the prior four full quarters is less
than 2.0 to 1; or

o the amount of such dividend, when added to the aggregate amount of all
other dividends and specific other restricted payments made by Statia
Terminals International after November 27, 1996 and not covered by other
exceptions in the indenture, exceeds the following sum:

o 50% of Statia Terminals International's consolidated net income, as
defined in the indenture and taken as one accounting period, from
November 27, 1996 to the end of Statia Terminals International's
most recently ended fiscal quarter for which internal financial
statements are available at the time of such dividend or, if such
aggregate consolidated net income is a deficit, minus 100% of such
aggregate deficit,

plus

o the net cash proceeds from the issuance and sale after November 27,
1996 of Statia Terminals International capital stock

o excluding any issuance or sale to a subsidiary of Statia Terminals
International.

Some other dividends, generally unrelated to operating cash flow, are permitted
notwithstanding the second and third items above.

We believe that cash flow generated by operations and amounts available
under the revolving credit facility will be sufficient, until the maturity of
the mortgage notes, to fund working capital needs, capital expenditures and
other operating requirements, including any expenditures required by applicable
environmental laws and regulations, and to service debt. Our operating
performance and ability to service or refinance the mortgage notes and to extend
or refinance the revolving credit facility will be subject to future economic
conditions and to financial, business and other factors, many of which are
beyond our control. We can give no assurances that our future operating
performance will be sufficient to service our indebtedness or that we will be
able to repay at maturity or refinance our indebtedness in whole or in part.

LIQUIDITY AND CAPITAL RESOURCES--PRIOR TO THE CASTLE HARLAN ACQUISITION

Except for cash of our Canadian subsidiaries, prior to the Castle Harlan
acquisition we were a participant in Praxair/CBI Industries' cash management
system, which swept all cash receipts into our predecessor company's investment
program. Cash for operations and capital expansion was funded by our operations,
our predecessor company's operations and debt facilities available to us, which
were guaranteed by our predecessor company. During 1996, prior to the Castle
Harlan acquisition, cash provided by operations of $9.1 million, proceeds from
insurance claims related to hurricane damage incurred in 1995 of $12.6 million
and net advances from Praxair of approximately $19.3 million, exclusive of
advances related to repayment of existing indebtedness, were used to finance the
purchase of property and equipment of $14.5 million and pay dividends to Praxair
and its affiliates of $25.8 million.

CAPITAL EXPENDITURES

We spent $15.7 million, $5.3 million and $10.7 million during the years
ended December 31, 1996, 1997 and 1998, respectively. These amounts include
$1.6 million, $0.9 million and $1.7 million, respectively, which was spent to
enhance our ability to generate incremental revenues. Capital expenditures for
1996 were primarily for improvements made in connection with hurricane damage
incurred in 1995. During 1997, capital expenditures were made primarily for
various piping and tank enhancements at each location and a new warehouse at St.
Eustatius. During 1998, a majority of capital expenditures were related to
maintenance capital expenditures including our terminal and marine maintenance
programs.

Our preliminary capital expenditure budget for 1999 is $7.0 million for
maintenance capital expenditures and $2.1 million for producing incremental
revenues. Additional spending is contingent upon the addition of incremental
terminaling business.

The following table sets forth capital expenditures by location and
separates such expenditures into those which produce, or have the potential to
produce, incremental revenue, and those which represent maintenance capital
expenditures.

SUMMARY OF CAPITAL EXPENDITURES BY LOCATION
(DOLLARS IN THOUSANDS)

PRODUCE MAINTENANCE
INCREMENTAL CAPITAL
REVENUES EXPENDITURES TOTAL % OF TOTAL
----------- ------------- -------- ----------

YEAR ENDED DECEMBER 31, 1996
Netherlands Antilles................................ $89,344(1) $11,969(2) $101,313(1)(2) 97.2%
Canada.............................................. 751 451 1,202 1.2%
Brownsville, Texas (3).............................. 19 1,226 1,245 1.2%
All other United States............................. -- 444 444 0.4%
------- ------- -------- ------
Total............................................ $90,114 $14,090 $104,204 100.0%
------- ------- -------- ------
------- ------- -------- ------
YEAR ENDED DECEMBER 31, 1997
Netherlands Antilles................................ $ 696 $ 2,858 $ 3,556 66.5%
Canada.............................................. 120 834 954 17.9%
Brownsville, Texas (3).............................. 125 100 225 4.2%
All other United States............................. -- 609(4) 609 11.4%
------- ------- -------- ------
Total............................................ $ 941 $ 4,401 $ 5,344 100.0%
------- ------- -------- ------
------- ------- -------- ------
YEAR ENDED DECEMBER 31, 1998
Netherlands Antilles................................ $ 667 $ 5,990 $ 6,657 62.1%
Canada.............................................. 829 476 1,305 12.2%
Brownsville, Texas (3).............................. 218 94 312 2.9%
All other United States............................. -- 2,440(4) 2,440 22.8%
------- ------- -------- ------
Total............................................ $ 1,714 $ 9,000 $ 10,714 100.0%
------- ------- -------- ------
------- ------- -------- ------

(1) Includes purchase of First Salute assets.
(2) Includes $6.8 million of capitalized enhancements related to the hurricanes
of 1995.
(3) We sold our Brownsville, Texas facility on July 29, 1998.
(4) Includes expenditures for U.S. flagged marine equipment utilized primarily
in the Netherlands Antilles.

Prior to 1996, we financed the construction of additional crude oil
terminaling assets at St. Eustatius through a leveraged lease arrangement,
effectively removing $88.5 million of assets and liabilities from our balance
sheet. For a discussion of the leveraged lease arrangement, see note 9 to the
consolidated financial statements. We leased land to a special purpose financing
entity, First Salute, upon which the crude tanks were constructed. These crude
oil facilities at St. Eustatius were leased back to us. During the life of the
lease, we accounted for monthly lease payments, consisting primarily of interest
on the underlying financing, and recognized an accrual towards the residual
guarantee value within the line item cost of services and products sold. During
1996, we paid $5.6 million to First Salute which consisted primarily of interest
costs on the underlying debt. All obligations under the lease were satisfied
prior to the Castle Harlan acquisition and the related assets were included on
the balance sheet at that time.

ENVIRONMENTAL, HEALTH AND SAFETY MATTERS

We are subject to comprehensive and periodically changing environmental,
health and safety laws and regulations within the jurisdictions of our
operations, including those governing oil spills, emissions of air pollutants,
discharges of wastewater and storm waters, and the disposal of non-hazardous and
hazardous waste. In 1996, 1997, and 1998, our capital expenditures for
compliance with environmental, health and safety laws and regulations were
approximately $1.3 million, $1.3 million and $2.7 million, respectively. These
figures do not include routine operational compliance costs, such as the costs
for the disposal of hazardous and non-hazardous solid waste, which were
approximately $0.4 million, $0.2 million and $0.9 million in 1996, 1997 and
1998, respectively. We believe we are presently in substantial compliance with
applicable laws and regulations governing environmental, health and safety
matters. The Praxair agreement includes a covenant by Praxair to pay some
environmental investigation,

remediation and upgrade costs. With respect to seven identified items of
environmental investigation and remediation, this covenant is subject to dollar
limitations aggregating $4.2 million. With respect to all other costs covered by
the Praxair covenant there are no dollar limitations. However, we cannot
guarantee that Praxair will pay all of the indemnified amounts without dispute
or delay.

Past uses of the Point Tupper facility, including its past operation by
others as an oil refinery, have resulted in particular on-site areas of known
and potential contamination, as described below. Under Canadian environmental,
health and safety laws, we, as the owner and operator of the facility, can be
held liable for mitigation or remediation of, and damages arising from, these or
other as yet unknown environmental, health and safety conditions at the
facility.

In connection with the Castle Harlan acquisition in 1996, phase I and
limited phase II environmental site assessments were conducted at the Point
Tupper terminal to identify potential environmental, health and safety matters.
Particular environmental matters and conditions that were likely to require the
incurrence of costs were identified and Praxair agreed to pay the costs of
addressing certain of such matters, subject in some cases to monetary
limitations. Since then we have been undertaking, in accordance with
environmental, health and safety laws, investigations, remediation and upgrading
to address these and other more recently identified matters.

Some of these matters involve environmental contamination associated with
particular areas of the property, some of which result from the past operation
of the facility by others as a refinery. These include a former sludge and waste
disposal area, with respect to which a remediation plan is being developed and
two pump stations, with respect to which further delineation and remediation of
contaminated soil are underway. Another contaminated area includes the area
surrounding an above-ground crude oil storage tank, the investigation and
delineation of which is at an early stage, although the contamination appears to
be contained within a fairly limited area.

Particular terminal facilities have also been identified as requiring
upgrading or remediation to meet the requirements of existing environmental,
health and safety laws. These include, among other matters, an oil-water
separator required to process facility run-off and to treat ballast water, with
respect to which the rebuilding of the separator is expected to be completed in
1999, a ballast reception line has been installed, and petroleum contamination
discovered beneath the separator is being addressed, and the upgrading of
containment areas for above-ground storage tanks, with respect to which survey
work has been completed and civil work is expected to commence during 1999.
Upgrading and remediation work also includes the removal of underground storage
tanks, with respect to which the removal has been completed and the remediation
of associated contaminated soil is underway, and the removal of friable asbestos
from particular areas of the terminal, the removal and disposal of substantially
all of which has been completed and we are awaiting final inspection and the
issuance of a certificate of compliance.

With respect to the foregoing environmental liabilities and costs, Praxair,
in connection with the Castle Harlan acquisition, to date has paid approximately
$2.3 million. We anticipate incurring additional costs of $0.7 million which are
not likely to be reimbursable from Praxair. Based on the investigation conducted
and information available to date, the potential cost of additional remediation
and compliance related to the foregoing matters is currently estimated to be
approximately $10 million. Praxair is required under the Praxair agreement to
pay the costs of this additional remediation and compliance, and has not
disputed this obligation. However, Praxair has questioned whether some of the
methods included in the $10 million estimate are the most cost effective and
whether some of the remediation included in such estimate is necessary.

We have also identified environmental, health and safety costs that are not
covered by the Praxair agreement, including the $0.7 million discussed above,
for which we accrued $1.5 million during 1996, $10,000 of which has been spent
through the end of 1998. We can give no assurances that such accrual is
sufficient to cover all such environmental, health and safety costs.

We can give no assurances that additional liabilities, either presently
known or discovered in the future, under existing or future environmental,
health and safety laws and outside the scope of the Praxair agreement will not
be material. In addition, we can give no assurances that we will not have to
incur material expenses before Praxair pays

amounts for which Praxair ultimately would be responsible.

We anticipate that we will incur additional capital and operating costs in
the future to comply with currently existing laws and regulations, amendments to
such laws and regulations, new regulatory requirements arising from recently
enacted statutes, and possibly new statutory enactments. As government
regulatory agencies have not yet promulgated the final standards for proposed
environmental, health and safety programs, we cannot at this time reasonably
estimate the cost for compliance with these additional requirements, some of
which will not take effect for several years, or the timing of any such costs.
However, we believe any such costs will not have a material adverse effect on
our business and financial condition or results of operations.

INFORMATION TECHNOLOGY AND THE YEAR 2000

Some computer software and hardware applications and embedded
microprocessor, microcontroller or other processing technology applications and
systems use only two digits to refer to a year rather than four digits. As a
result, these applications could fail or create erroneous results in dealing
with particular dates and especially if the applications recognize "00" as the
year 1900 rather than the year 2000. During 1997, we developed a Year 2000 plan
to upgrade our key information systems and simultaneously address the potential
disruption to both operating and accounting systems that might be caused by the
Year 2000 problem. The Year 2000 plan also provides for the evaluations of the
systems of customers, vendors, and other third-party service providers and
evaluations of our non-information technology systems, which include embedded
technologies such as microcontrollers and is also referred to as non-traditional
information technology.

We have substantially completed the assessment phase of the Year 2000 plan
as it relates to both traditional and non-traditional technology applications
and systems. We are currently in the process of testing new Year 2000 compliant
terminal operations software at our facilities. We anticipate that the Year 2000
compliant terminal operations systems will be fully implemented in the first
quarter of 1999. We recently selected a fully integrated Year 2000 compliant
finance, accounting, and human resources system and expect to have the new
system fully operational by the third quarter of 1999.

We have identified some components of our control systems at our two
terminals as not being Year 2000 compliant. These systems measure, regulate,
control and maintain crude oil and petroleum product flow and fire protection
equipment at the terminals. We are currently evaluating the best means to
mitigate the possible adverse effects resulting from the potential failure of
these systems including repair or replacement and, in some cases, have already
initiated replacement of non-compliant components. However, we believe that in a
worst case scenario, existing manual overrides would prevent the failure of
these systems from having a material adverse effect on our operations.

In accordance with our Year 2000 plan, we have initiated a formal
communications process with other companies with which our systems interface or
rely on to determine the extent to which those companies are addressing their
Year 2000 compliance. In connection with this process, we have sent numerous
letters and questionnaires to third parties and are evaluating those responses
as they are received. Where necessary, we will be working with those companies
that are not yet Year 2000 compliant to mitigate any material adverse effect
such non-compliance may have on us. Based upon information we have received and
reviewed of our possible existing relationships with third parties, we do not
currently anticipate that any third-party non-compliance would have a material
adverse effect on our business, results of operations, or financial condition.

In 1998, we spent $1.1 million related to our Year 2000 remediation efforts
of which we have capitalized $1.0 million and expensed $0.1 million. In 1999, we
anticipate spending an additional $0.8 million to complete these efforts of
which we anticipate capitalizing $0.7 million and expensing $0.1 million.
However, we cannot guarantee that these estimates will be met and actual
expenditures could differ materially from these estimates.

Based upon information currently available to us, we believe our efforts
will succeed in preventing the Year 2000 issue from having a material adverse
effect on us. However, the pervasive nature of the Year 2000 issue may prevent
us from fully assessing and rectifying all

systems that could have an effect on our business, results of operations, or
financial condition.

POLITICAL, INFLATION, CURRENCY AND INTEREST RATE RISKS

We periodically evaluate the political stability and economic environment
in the countries in which we operate. As a result of these evaluations, we are
not presently aware of any matters that may adversely impact our business,
results of operations or financial condition. The general rate of inflation in
the countries where we operate has been relatively low in recent years causing a
modest impact on operating costs. Typically, inflationary cost increases result
in adjustments to storage and throughput charges because long term contracts
generally contain price escalation provisions. Bunker fuel and bulk product
sales prices are based on active markets, and we are generally able to pass any
cost increases to customers. Except for minor local operating expenses in
Canadian dollars and Netherlands Antilles guilders, all of our transactions are
in U.S. dollars. Therefore, we believe we are not significantly exposed to
exchange rate fluctuations.

As all of our present debt obligations carry a fixed rate of interest,
except for the undrawn revolving credit facility which varies with changes in
the lender's prime lending rate, we believe our exposure to interest rate
fluctuations is minimal.

TAX MATTERS

Pursuant to a Free Zone and Profit Tax Agreement with the island government
of St. Eustatius which is scheduled to expire on December 31, 2000, we are
subject to a minimum annual tax of 500,000 Netherlands Antilles guilders or
approximately $282,000. This agreement further provides that any amounts paid to
meet the minimum annual payment will be available to offset future tax
liabilities under such agreement to the extent that the minimum annual payment
is greater than 2% of taxable income. Discussions regarding modification and
extension of this agreement are in progress, and we believe that, although some
terms and conditions could be modified and that the amounts payable to these
governments may be increased, extension of this agreement is likely. However, it
is possible that such amounts may be increased more than anticipated and that
government authorities may impose additional fees if this agreement is not
extended or is otherwise amended.

Tax rates in the jurisdictions in which we operate did not change
significantly between 1996 and 1998 other than the enactment of a Nova Scotia
provincial capital tax effective April 1, 1997. This capital tax is immaterial
to our overall results and financial position.

Particular income tax liabilities incurred prior to November 27, 1996 were
assumed by Praxair, and we retained net operating loss carryforwards of
$7.5 million in Canada. We also retained investment tax credits in the
Netherlands Antilles and Canada, which may be used to offset future taxes
payable. As a result of the Castle Harlan acquisition, particular Canadian
assets were revalued for tax purposes resulting in a loss of $77.2 million
during 1996.

The combined net operating loss and investment tax credit carryforward
available to offset Canadian taxable income was $62.4 million as of
December 31, 1998 which expires in varying amounts through 2005. We have
provided a full valuation allowance against these deferred tax assets because it
is not certain that any deferred tax assets will be utilized in the future.

LEGAL PROCEEDINGS

Global Petroleum Corp. and one of its affiliates sued us in December of
1993 seeking the release of petroleum products we were holding to secure the
payment of invoices. The Supreme Court of Nova Scotia ordered the release of the
products once Global posted a $2.0 million bond. Global claimed damages of
$1.2 million for breach of contract, and we counterclaimed for breach of
contract and payment of approximately $2.0 million of overdue invoices. In April
1996, Global, Scotia Synfuels Limited and their related companies sued CBI
Industries and us in the Supreme Court of Nova Scotia alleging $100 million in
damages resulting from misrepresentation, fraud and breach of fiduciary duty.
The plaintiffs allege these claims arose out of the level of costs and expenses
paid to subsidiaries of CBI Industries and others for the reactivation of the
Point Tupper facility and the

subsequent sale of the plaintiff's diluted shares in the entity owning the Point
Tupper facility to one of our affiliates, which was at that time a subsidiary of
CBI Industries. These proceedings are currently in the discovery phase.

In May 1994, the U.S. Department of Justice sued two of our subsidiaries
for $3.6 million of pollution clean-up costs in connection with the discharge of
oil into the territorial waters of the U.S. Virgin Islands and Puerto Rico by a
barge that had been loaded by one of our subsidiaries at St. Eustatius but was
not affiliated with us. On April 16, 1998, the U.S. District Court ruled that it
lacked jurisdiction over such subsidiary and dismissed it from the case.

We believe the allegations made in these proceedings are factually
inaccurate and intend to vigorously contest these claims. In connection with the
Castle Harlan acquisition, Praxair agreed to indemnify us against damages
relating to the proceedings described above. While we can not estimate any
ultimate liability or guaranty that Praxair will pay all of the indemnified
damages without dispute or delay, we believe these proceedings will not
materially affect our business and financial condition, results of operations or
ability to make the target quarterly distribution.

We are involved in various other claims and litigation related to the
ordinary conduct of our business. Based upon our analysis of legal matters and
our discussions with legal counsel, we believe that these matters will not
materially impact our business and financial condition, results of operations or
ability to make the target quarterly distribution.

INSURANCE

We maintain insurance policies on insurable risks at levels we consider
appropriate. At the present time, we do not carry business interruption
insurance due to, what we believe, are excessive premium costs for the coverage
provided. However, we do carry business interruption insurance for our offshore
single point mooring system. While we believe we are adequately insured, future
losses could exceed insurance policy limits, or under adverse interpretations,
be excluded from coverage. Future liability or costs, if any, incurred under
such circumstances could adversely impact cash flow.

ACCOUNTING STANDARDS AND POLICIES

In 1998, we adopted Statement of Financial Accounting Standards ("SFAS")
No. 128--"Earnings Per Share." Pro forma diluted earnings per common and
subordinated share and incentive right calculations are determined by dividing
net income by the weighted average number of common and subordinated shares and
incentive rights outstanding. SFAS No. 128 had no impact on our reported
earnings per share.

In 1998, we adopted SFAS No. 130--"Reporting Comprehensive Income" which
establishes standards for the reporting and display of comprehensive income and
its components. There were no material differences between net income and
comprehensive income.

In 1998, we adopted SFAS No. 131--"Disclosures about Segments of an
Enterprise and Related Information" which establishes standards for the way that
public business enterprises report information about operating segments in
annual financial statements and requires that those enterprises report selected
information about operating segments in interim financial reports issued to
stockholders. It also establishes standards for related disclosures about
product and service, geographic areas, and major customers. The adoption of SFAS
No. 131 had no impact on results of operations, financial position or cash flow.

In June 1998, the FASB issued SFAS No. 133--"Accounting for Derivative
Instruments and Hedging Activities" which establishes standards of accounting
for derivative instruments including specific hedge accounting criteria. SFAS
No. 133 is effective for fiscal years beginning after June 15, 1999 although
earlier adoption is allowed. We have not yet quantified the impacts of adopting
SFAS No. 133 and have not determined when we will adopt SFAS No. 133. However,
as we do not presently have derivative instruments, we do not expect SFAS
No. 133 to have a material impact on us.

OTHER MATTERS

We have reclassified our emergency spill response vessel M/V Statia
Responder (formerly known as the M/V Megan D. Gambarella) from its original
asset held for sale classification to property and equipment as we are no longer
actively seeking buyers for the vessel. Some of Statia Terminals

Group's preferred stock agreements required it to utilize any net proceeds from
the sale of the vessel to redeem Series B Preferred Stock at the applicable
redemption price prior to November 28, 1998. As the Series B Preferred Stock was
not redeemed by Statia Terminals Group prior to November 28, 1998, the dividend
rates on Statia Terminals Group's Series A, B and C Preferred Stock increased
from 8% to 14.75% effective November 28, 1998, in accordance with its preferred
stock agreements.

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

We periodically purchase refined petroleum products from our customers and
others for resale as bunker fuel, for small volume sales to commercial interests
and to maintain an inventory of blend stocks for our customers. Petroleum
product inventories are held for short periods, generally not exceeding ninety
days. We do not presently have any derivative positions to hedge our inventory
of petroleum products. The following table indicates the aggregate carrying
value of our petroleum products on hand at December 31, 1998 computed at average
costs, net of any lower of cost or market valuation provisions, and the
estimated fair value of such products.

ON BALANCE SHEET COMMODITY POSITION
(DOLLARS IN THOUSANDS)

AS OF DECEMBER 31, 1998
-----------------------------
CARRYING AMOUNT FAIR VALUE
--------------- ----------

Petroleum inventory:
Statia Terminals N.V. ............................................................ $ 4,205 $4,205
Statia Terminals Canada........................................................... 323 338
------- ------
Total............................................................................... $ 4,528 $4,543
------- ------
------- ------

INDUSTRY

TERMINALING

The petroleum terminaling industry consists of two market segments. One
segment is characterized by the ownership and management of terminals inland
along major crude oil or petroleum product pipelines. This segment is primarily
engaged in the distribution of crude oil to inland refineries or of petroleum
products via pipeline, rail or truck. The second segment of the industry is
marine terminaling. This segment is primarily engaged in bulk storage and
transshipment of crude oil and petroleum products of domestic and overseas
producers, integrated oil companies, traders, refiners and distributors.
"Transshipment" is the process whereby customers transfer their products either
from a vessel to storage tanks for subsequent transfer to other vessels for
delivery to other destinations or from one ship to another ship across the dock.
We are engaged only in marine terminaling.

Demand for terminaling services depends on the supply of and demand for
crude oil and petroleum products in the U.S. The U.S. Department of Energy
reports that U.S. demand for crude oil and petroleum products increased at an
annual compound growth rate of 1.8% between 1993 and 1998. According to U.S.
Department of Energy statistics, while demand in the U.S. has risen, domestic
crude oil production has fallen at an annual compound percentage rate of 1.3%
between 1993 and 1998 resulting in an increase in crude oil and petroleum
product imports at an annual compounded rate of 3.4% over the same period. In
addition, the U.S. Department of Energy reports that average U.S. refinery
utilization was at 92% in 1993 and 96% in 1998.

The U.S. Department of Energy projects that the import requirements of
crude oil and refined petroleum products into the U.S. will increase at an
annual compounded rate of 4.3% from 1998 through 2003.

A substantial portion of crude oil and petroleum products storage terminals
are "captive," i.e., they are owned by producers, refiners and pipeline
operators and used almost exclusively for their own operations. The independent
terminaling operator segment of the marine terminaling industry which is
described in this prospectus excludes these captive terminals. Captive terminal
storage is only occasionally made available to the general market and lacks
competitive advantages of independent operations, the most important of which is
confidentiality.

The Independent Liquid Terminals Association is an international trade
association that represents commercial operators of bulk liquid terminals,
above-ground tank storage facilities, and pipeline facilities located in North
and South America, Europe, Asia, the United Kingdom, Australia, New Zealand and
South Africa. As published in the 1997 ILTA Bulk Liquids Terminals Directory,
the 86 ILTA member companies operated 483 deepwater barge and pipeline terminals
with an aggregate capacity of over 327 million barrels of dry bulk and liquid
storage capacity in more than 13,720 tanks. More than 400 of these bulk liquid
terminals are located in the U.S. and represent over 277 million barrels of
capacity.

U.S. CRUDE OIL AND PETROLEUM PRODUCT IMPORTS

[CHART]

(In million barrels per day)

1993 8.62

1994 8.99

1995 8.84

1996 9.48

1997 10.16

1998(1) 10.20

Source: U.S. Department of Energy
(1) This is a projected number.

Companies generally use marine liquids terminals for various reasons
including:

o to take advantage of economies of scale by transporting crude oil or
petroleum products in bulk to a terminal as near to the ultimate
destination as possible;

o to blend crude oil or petroleum products to meet market specifications;

o to process products stored by their customers to add value for a specific
downstream market;

o to store crude oil or petroleum product temporarily; and

o to access fuel, in a process known as "bunkering", and supplies for
consumption by marine vessels.

BULK CARGO MOVEMENT

Due to significant economies of scale, petroleum companies ship crude oil
from the Middle East, North Sea and West Africa in very-large or ultra-large
crude carriers to a transshipment point such as one of our terminals. These
very-large and ultra-large crude carriers, however, are too large to deliver
their cargo directly to many ports, including virtually all U.S. ports.
Therefore, most petroleum companies are forced to either partially or completely
"lighter" their cargo, which is the process by which liquid cargo is transferred
to smaller vessels, usually while at sea, or transship their cargo through a
terminal to other smaller vessels that can enter U.S., Canadian and Caribbean
ports. Both of our facilities can handle substantially all of the world's
largest fully-laden very-large and ultra-large crude carriers.

We believe that terminaling offers several advantages over lightering.
Terminaling generally provides more flexibility in the scheduling of deliveries
and allows our customers to deliver their products to multiple locations.
Terminaling is also generally safer and more environmentally sound than
lightering which is conducted at sea and may be impacted by vessel movement,
adverse weather and sea conditions. Lightering in U.S. territorial waters also
creates a risk of liability for owners and shippers of oil. Under the U.S. Oil
Pollution Act of 1990 and other state and federal legislation, significant
liability is imposed for spills in U.S. territorial waters. In Canada, similar
liability exists under the Canadian Shipping Act. Terminaling also provides
customers with the ability to access value added terminal services.

Lightering generally takes significantly longer than discharging at a
terminal. For example, a fully laden ultra-large crude carrier may require up to
seven days to fully discharge by lightering, but only 24 to 48 hours to fully
discharge at our

terminals. In addition, terminals allow oil producers to store oil and benefit
from value-added services. The advantages of terminaling may be offset in market
conditions where the direct costs of terminaling are higher than those of
lightering. The direct cost differential of lightering versus terminaling
changes as charter rates change for ships of various sizes. Under current market
conditions, lightering in most instances costs less than terminaling, primarily
by allowing very-large and ultra-large crude carriers to cover the larger
portion of the total journey.

The U.S. Oil Pollution Act of 1990 also prohibits single-hulled tankers
built after 1990 from entering U.S. territorial waters, regardless of whether
for lightering or docking purposes. In addition, this law prohibits all vessels
utilizing single-hulls from entering U.S. territorial waters after 2010. The
U.S. Coast Guard has modified these restrictions through regulations which
permit lightering activities in restricted lightering zones near the U.S. East
coast and Gulf coast. The Canadian Standards for Double Hull Construction of Oil
Tankers currently prohibit single-hulled oil tankers, constructed after July
1993, and after January 1, 2010, prohibit substantially all single-hulled oil
tankers from entering Canadian territorial waters. Currently, approximately 80%
of the world's very-large and ultra-large crude carriers are single-hulled. The
majority of such vessels were built prior to 1990.

BLENDING

Increasingly stringent environmental regulations in the U.S., Canadian and
European marketplaces create additional demand for facilities that can blend a
variety of components into finished products that meet such regulations as well
as customers' specific requirements. Blending requires specialized equipment and
expertise. In addition, blenders must have a full range of blendstocks
available. The evolving reformulated gasoline market in the U.S., resulting
primarily from emission-reduction regulations, including the U.S. Clean Air Act,
as amended, tightening specifications for distillates and the increasing need
for blended residual fuel are expected to enhance the growth of the product
blending segment of the terminaling industry. We regularly blend components to
make finished gasolines and various grades of residual fuel. Fuel oils are also
blended for utilities and other commercial uses and crude oils are blended for
refiners.

PROCESSING

Atmospheric distillation is a process that applies heat to separate the
hydrocarbons in crude oil into several petroleum products. Most simple
distillation units, including ours, produce at least three product streams:
naphtha, distillate (heating oil) and residual fuel. The profitability of
atmospheric distillation is dependent on feedstock, operating and other costs
compared to the value of the resulting products.

SEASONAL AND OPPORTUNITY STORAGE

Refiners and traders use storage facilities to take advantage of seasonal
movements and anomalies in the crude oil and petroleum products markets. When
crude oil and petroleum product markets are in contango by an amount exceeding
storage costs, the time value of money, the cost of a second vessel plus the
cost of loading and unloading at a terminal, the demand for storage capacity at
terminals usually increases. When crude oil and petroleum products markets are
in backwardation for any length of time, the traditional users of terminal
storage facilities are less likely to store product, thereby reducing storage
utilization levels. Historically, heating oil has been in contango during the
summer months and gasoline has been in contango during the winter months. As a
result, demand for heating oil storage is typically strongest during the summer,
fall and winter months and demand for gasoline storage is typically strongest in
the winter, spring and summer months. We can give no assurances, however, that
the crude oil and petroleum products markets will follow these patterns in the
future.

CRUDE OIL SPOT PRICE VS. FOUR MONTH FUTURE PRICE

[GRAPHIC]

Source: New York Mercantile Exchange

Since late 1997, all segments of the crude oil and petroleum products
markets have generally been in contango. As a result, previously available
storage tank capacity began to diminish and storage tank lease rates began to
rise during 1998. The shift toward contango is due in part to the current
worldwide excess supply of crude oil, which has resulted in a sharp decrease in
spot prices for most petroleum products. This contango condition followed an
unusually long period of backwardation for all segments of the crude oil and
petroleum products markets which stretched from the beginning of 1995 to late
1997. We believe that our business was adversely impacted during the
backwardation period. Several factors contributed to this unusually long
backwardation period, including anticipation of incremental crude oil supplies
entering the market from Iraq and elsewhere, a shift to "just in time inventory"
positions by many oil companies, and strong demand for petroleum products.

During 1998 and 1999, members of the Organization of Petroleum Exporting
Countries in conjunction with other non-OPEC members attempted to reduce
worldwide crude oil production with the intent of supporting oil market prices
for petroleum products. An agreement to reduce production was achieved in 1999.
Although we continue to monitor and evaluate developments, we are not aware of
any matters emanating from the recent meetings and agreement that adversely
impact our current terminaling business.

BUNKER SALES

"Bunkering" means the sale and delivery of fuels to marine vessels to be
used for their own engines. The customer base and suppliers of bunker fuel are
located worldwide. Sales of bunker fuel, which includes diesel oil, gas oil and
intermediate fuel oil, are driven primarily by the proximity of the supply
location to major shipping routes and ports of call, the amount of cargo carried
by marine vessels and the price, quantity and quality of bunker fuel.

Bunker fuel is sold under international standards of quality that are
recognized by both fuel suppliers and ship operators. Components for bunker
fuels are purchased in bulk lots of various grades and then blended to meet
customer specifications. Each supplier is responsible for quality control and
other merchantability aspects of the fuel they sell.

Traditionally, the bunker fuel business was concentrated in those ports
with high ship traffic and near primary sources of refined marine fuels. In
recent years, the number of refiner/suppliers in many ports has diminished,
primarily in the U.S., Canada and Europe. As a result, the sale of bunker fuel
has increased at locations outside the U.S., Canada and Europe.

As many vessels have large bunker fuel tanks that allow them to travel long
distances between refueling stops, we compete with bunker delivery locations
around the world. In the Western Hemisphere, there are significant alternative
bunker locations, including on the U.S. East coast and Gulf coast and in Panama,
Puerto Rico, Aruba, Curacao, Halifax, Rotterdam and various North Sea locations.

BUSINESS
INTRODUCTION AND HISTORY

We believe we are one of the five largest independent marine terminaling
companies in the world as measured in terms of storage capacity. At the end of
1998, our tank capacity was 18.7 million barrels. We believe we are the largest
independent marine terminal operator handling crude oil imported into the
Eastern United States and Canada. Our two terminals are strategically located at
points of minimal deviation from major shipping routes. We provide terminaling
services for crude oil and refined products to many of the world's largest
producers of crude oil, integrated oil companies, oil traders, refiners,
petrochemical companies and ship owners. Our customers include Saudi Aramco and
Tosco. These customers transship their products through our facilities to the
Americas and Europe. We own and operate one storage and transshipment facility
located at the island of St. Eustatius, Netherlands Antilles, and one located at
Point Tupper, Nova Scotia, Canada. In connection with our terminaling business,
we also provide related value-added services, including:

o bunkering, which is the supply of fuel to marine vessels for their own
engines;
o crude oil and petroleum product blending and processing; and
o bulk product sales.

Our operations began in 1982 as Statia Terminals N.V., with an oil products
terminal located on the island of St. Eustatius. In 1984, CBI Industries, Inc.,
an industrial gases and contracting services company, acquired a controlling
interest in Statia Terminals N.V. We purchased Statia Terminals Southwest, Inc.
with its facility at Brownsville, Texas, in 1986. In 1990, CBI Industries became
the sole owner of Statia Terminals N.V. and Statia Terminals Southwest. In 1993,
we acquired the remaining shares not then owned by us of Statia Terminals Point
Tupper, Incorporated, located at Point Tupper. In 1996, Praxair, Inc. acquired
CBI Industries. In November 1996, Castle Harlan Partners II L.P., members of our
management and others acquired from Praxair all of the outstanding capital stock
of Statia Terminals N.V., Statia Terminals, Inc., their subsidiaries and some of
their affiliates. Castle Harlan Partners II L.P. is a private equity investment
fund managed by Castle Harlan, Inc., a private merchant bank. At the same time,
Statia Terminals Point Tupper, Incorporated was amalgamated into Statia
Terminals Canada, Incorporated. Statia Terminals Group, Statia Terminals
International and Statia Terminals Canada were organized for purposes of
facilitating the acquisition by Castle Harlan and our management. In July 1998,
we sold Statia Terminals Southwest to an unaffiliated third party purchaser.

Simultaneously with the closing of this offering, Statia Terminals Group,
will redeem or reclassify all of its currently outstanding capital stock, and it
will issue the common shares offered hereby, the subordinated shares and the
incentive rights. As a result, Praxair's investment in it will be terminated,
and the other current holders of Statia Terminals Group's capital stock will
continue to own equity of Statia Terminals Group in the form of the subordinated
shares and incentive rights. See "The Restructuring."

Our day-to-day operations are managed at the respective terminal locations.
Our management team and employee base possess a diverse range of experience and
skills in the terminaling industry. This experience has permitted us to better
understand the objectives of our customers and to forge alliances with those
customers at our terminals to meet those objectives. Thus, we believe that our
operations extend beyond the traditional approach to terminaling. We are a
premier provider of the core services offered by other terminal operators. In
addition, unlike many of our competitors, we refrain from competing with our
customers and provide ancillary, value-added services tailored to support the
particular needs of our customers.

Our earnings before interest expense, income taxes, depreciation and
amortization increased from $20.3 million in 1996 to $22.5 million in 1997 and
to $30.1 million in 1998. During 1996, 1997 and 1998, our cash flows from
operations were $11.3 million, $9.8 million and $18.2 million, respectively.
During these same years we experienced net losses of $3.2 million, $8.4 million
and $1.5 million, respectively. However, on a pro forma basis for 1998, our
earnings before interest expense, income taxes, depreciation and amortization
and our net income were $32.9 million and $9.7 million, respectively. Earnings
before interest expense, income taxes, depreciation and amortization is
presented to provide additional

information related to our ability to service debt. Earnings before interest
expense, income taxes, depreciation and amortization is not an alternative
measure of operating results or cash flow from operations. For information on
our bunker and bulk product sales and terminaling services segments, as well as
information with respect to our geographic operations, please see note 14 of our
consolidated financial statements.

COMPETITIVE STRENGTHS

We believe that the quality and breadth of our services and our market
presence distinguish us as one of the leading independent marine terminaling
companies in the world. We believe that we are well positioned to compete in the
independent marine terminaling industry and that our most significant
competitive strengths are:

o Strategic Locations. Our facilities are strategically located near the
U.S. East coast and Gulf coast. Our St. Eustatius facility is located at a point
of minimal deviation from the major shipping routes from the Arabian Gulf via
the Cape of Good Hope, from West Africa to the U.S. East coast and Gulf coast
and from the Panama Canal and South America to Europe. Our Point Tupper facility
is located on the Strait of Canso at Point Tupper, Nova Scotia, a point of
minimal deviation from the shipping routes from the North Sea oil fields to the
U.S. East coast, Canada and the Midwestern U.S. via the St. Lawrence Seaway and
the Great Lakes system. At Point Tupper we operate the deepest independent
ice-free marine terminal on the North American Atlantic coast. The St. Eustatius
facility can accommodate all of, and the Point Tupper facility can accommodate
substantially all of, the world's largest fully-laden very-large and ultra-large
crude carriers. Due to draft restrictions, many U.S. ports cannot accommodate
many of the world's largest fully-laden very-large and ultra-large crude
carriers.

We offer a lower cost alternative to U.S. based marine terminals, primarily
due to the fact that the U.S. Jones Act and particular other U.S. regulations do
not apply to our locations. The Jones Act mandates that cargo transported
between two U.S. ports be carried only on American-manufactured,
- -registered and -crewed vessels, the costs of which are generally considerably
higher than those of comparable foreign vessels. In addition, other U.S.
regulations require the use of expensive double-hulled vessels and unlimited
liability insurance. As a result, use of our foreign facilities is considerably
more cost-effective than use of U.S.-based marine terminals for transshipment to
other U.S. destinations.

o High Quality Assets. We have built or renovated approximately 80% of our
tank capacity and related marine installations during the last eight years.
Since 1990, we have tripled our storage capacity at St. Eustatius and added an
offshore single point mooring buoy with loading and unloading capabilities. At
Point Tupper, we converted and renovated a former refinery site into an
independent storage terminal. We believe that the speed at which our facility
can discharge or load crude oil and petroleum products and the level of
maintenance and automation and the diversity of our service capabilities at our
facilities generally equals or exceeds that of our competitors. Our other
facilities constructed prior to 1990 have been maintained to high standards and
are in good condition.

o Breadth of Services. We believe we have a broader range of services than
any of the other independent terminals with which we compete. In addition to
storage, we provide several complementary services which generate ancillary
revenues and additional storage and throughput volume. Such services include
bunkering, crude oil and petroleum product blending and processing, emergency
and spill response, bulk product sales and other ship services. For example, we
own butane storage spheres at each of our facilities which enhance our gasoline
blending capabilities, and we own an atmospheric distillation unit at our St.
Eustatius facility for refining crude oil and petroleum products. We utilize our
butane storage spheres and atmospheric distillation unit to improve the quality
and value of our customers' products.

o Free Trade Status. Our St. Eustatius facility has qualified for
designation as a free trade zone and our Point Tupper facility has qualified for
designation as a custom bonded warehouse. Such status allows us and our
customers to transship products to other destinations and trade with other
customers with minimal Netherlands Antilles or Canadian tax effects.

o Experienced Management Team. Members of our senior management average
over 25 years of experience in terminaling-related industries. Prior to

joining us, members of our management worked at companies such as Pakhoed USA,
Inc., GATX Corporation, The Coastal Corporation, Exxon, Hess, Petroleos de
Venezuela S.A. and CBI Industries. Their experience has included training in
terminal operations, crude oil and petroleum blending, oil trading, shipping,
engineering, construction and project management, refinery operations, sales
and marketing, and finance. Senior management experience has enabled us to
develop key strategic relationships with customers at our terminal locations.

BUSINESS STRATEGY

o Developing Strategic Relationships. To maximize recurring revenues
generated by charges for storage and throughput, we target customers who have a
continuing need to store crude oil and petroleum products to supply a specific
demand, such as a refinery or other downstream distribution to customers. We
seek to understand the long term needs of our principal customers and potential
customers and to modify our facilities and operations to meet those needs. To
provide maximum flexibility to our customers, our tanks have been designed and
constructed to handle a range of crude oil and petroleum products. In some cases
we may, together with a customer, design and build additional storage or
processing facilities. We can also offer a customized mix of terminaling related
services that improve the quality of or add value to our customers' products. In
this manner, we try to provide long term logistical solutions for these
customers at our strategically located facilities and thereby become their
preferred provider of storage and other terminaling services.

o Generating Stable Cash Flow Through Long Term Contracts. We have
generally entered into long term storage contracts with the customers with whom
we have established strategic relationships. These contracts generally have
terms of one to five years plus, in most cases, renewal options. These contracts
provide us with minimum monthly payments and generate a stable cash flow from
both the contracted storage services and the provision of terminaling-related
services to these customers and the vessels that transport their products, such
as dock charges and standby emergency response fees. Approximately 71% of our
1998 tank capacity and approximately 64% of our 1998 storage and throughput
revenues, excluding related ancillary services, were from long term contracts.

o Emphasizing Customer Confidentiality. In contrast to many of our
competitors, we do not compete with our customers in the business of trading
crude oil and petroleum products. This ensures that we take full advantage of
the most important competitive advantage of terminal operations that are
independent from producers, refiners and pipeline operators--confidentiality. We
believe that, in general, our customers prefer to do business with providers of
services who are not competitors in order to maintain the secrecy of important
business data that could affect the demand for and the pricing of their product.

o Capitalizing on a Wide Range of Value-Added Services Offered. We seek to
further differentiate ourselves from our competitors and to increase revenues
through our comprehensive range of terminaling-related services which currently
includes bunkering, crude oil and petroleum product blending and processing,
emergency and spill response, bulk product sales and various ship services.

o Developing Opportunities at our Point Tupper Facility. Our facility at
Point Tupper is the deepest independent ice-free marine terminal on the North
American Atlantic coast and one of two independent terminals on the North
American Atlantic coast with the capacity to receive substantially all of the
largest fully-laden very-large and ultra-large crude carriers. Point Tupper
provides regional oil producers seeking to expand their market share in the U.S.
with a facility that is approximately two days by ship from the New York, New
Jersey and Philadelphia refineries. Point Tupper also has access by ship to the
Sarnia, Ontario, Quebec and the U.S. Mid-West refineries. Producers can gain a
strategic advantage by using the Point Tupper terminal to deliver cargo via
very-large or ultra-large crude carriers and then transshipping the cargo via
smaller ships suitable for access to shallower, draft-restricted ports on the
upper U.S. East coast. We believe that currently there is no competitor in the
region that can provide the combination of crude oil storage, crude

oil and petroleum product blending, and transshipment services we offer at Point
Tupper. We are seeking to attract additional storage business from producers of
crude oil and natural gas in the North Sea and from the emerging production
areas located in Eastern Canada. We have a substantial amount of available land
at Point Tupper. We plan to build new storage facilities at Point Tupper as the
demand for storage increases.

o Expanding Our Bunkering Operations. In order to compete with busy U.S.,
Canadian and European ports and to attract more ship operators, we seek to
provide reliable supply, timely delivery, and consistent quality of bunker fuel
while maintaining overall safety standards. We seek to further develop our
business at Point Tupper and expand this business to additional locations in
Eastern Canada by capitalizing on our reputation for consistently maintaining a
supply of quality marine fuels and lubricants for delivery to bunkering
customers. In addition, we plan to pursue opportunities to supply bunkers at
additional locations in the Caribbean from our St. Eustatius facility.

o Strategic Acquisitions. From time to time we will consider opportunities
to acquire other marine terminals and related businesses.

SERVICES AND PRODUCTS

We provide storage services in tanks which are designed to meet our
customers specifications and a full range of terminaling-related services,
including product blending, heating, mixing, separation, and removal of water
and other impurities. Our facilities can handle a variety of petroleum
materials, including light, medium and heavy crude oils, residual fuel oil,
gasoline, gasoline blending components, diesel, marine gas oil, marine diesel
oil, aviation fuel, bunker fuel, and butane. Residual fuel oil is comprised of
the residue from the distillation of crude oil after the light oils, gasoline,
naphtha, kerosene and distillate oils are extracted. We also handle petroleum
diluents, lubricating oils, butane and various other petroleum products.

We own seven berthing locations where vessels may load and discharge crude
oil and petroleum products at our St. Eustatius facility and two berthing
locations at our Point Tupper facility. With these berthing locations and our
uniquely designed mooring facilities and piping configurations, we can handle
oil tankers of various sizes, from relatively small to some of the largest in
the world and provide services such as simultaneous discharging and loading of
vessels and "across the dock" transfers. We charter tugboats and own other
marine equipment to assist with docking operations and provide port services.

We specialize in "in-tank" or "in-line" blending with computer-assisted
blending technology that assures product integrity and homogeneity. Our
facilities can blend and mix a full range of petroleum products including
gasoline, residual fuel oils, including bunker fuel, and crude oil. We believe
our blending capability has attracted customers who have leased capacity
primarily for blending purposes and who have contributed to our bunker fuel and
bulk product sales. We have worked closely with residual fuel oil market
participants, including refiners and oil traders, to assist them with their
blending operations.

We own storage spheres for butane at both of our facilities that enhance
our gasoline blending capabilities. We also own an atmospheric distillation unit
for refining at St. Eustatius. We use the storage spheres and the distillation
unit to improve product quality and add value to our customers' products.

As part of our petroleum product sales, we supply bunker fuel in the
Caribbean and in Nova Scotia, Canada. At and around St. Eustatius, our bunkering
business has evolved from offering bunker fuel to ships at the terminal berths
to a delivery system utilizing specially modified barges which provide fuel to
vessels at anchor. In the first quarter of 1996, we initiated bunker fuel
service operations at Point Tupper with deliveries via pipeline at the terminal
berths and by truck in the surrounding Strait of Canso area. During 1996, 1997
and 1998, 615, 575 and 582 vessels, respectively, received bunker fuels from us
in the Caribbean. During this period, we have concentrated our sales and
marketing efforts in the Caribbean to sell larger volumes of fuel per vessel
call. During this period the average volume of bunker fuel delivered per vessel
has increased as has the total volume delivered, while the number of vessels
bunkering at our facility has varied from year to year. In Canada during 1996,
1997 and 1998, 19, 10 and 3 vessels, respectively, received bunker fuels from
us. During this period, we were generally unable to secure an adequate source of

supply in Canada, and therefore, we leased the storage capacity that we had
previously allocated to storage of bunker fuel.

We purchase small quantities of petroleum products primarily to maintain an
inventory of blendstocks and bunker fuel. From time to time we purchase and sell
product to accommodate customers who wish to dispose of small quantities of
product or assist customers' sales activities and occasionally to take advantage
of attractive buying opportunities.

Netherlands Antilles and Canadian environmental laws and regulations
require ship owners, vessel charterers, refiners and terminals to have access to
spill response capabilities. At St. Eustatius, we own and operate the M/V Statia
Responder (formerly known as the M/V Megan D. Gambarella), a 194 foot
multi-function emergency response and maintenance vessel with spill response and
firefighting capabilities and underwater diving support. The Statia Alert, a
barge that is capable of recovering 200 gallons per minute of oil/water mixture,
and two response boats that can deploy booms to contain a spill within a
particular area and release absorbent materials, support our emergency and spill
response capability at St. Eustatius. The St. Eustatius facility also has three
tugs on time charter, and owns a line handling vessel and two mooring launches,
all of which are available for safe berthing of vessels calling at the terminal
and for emergency and spill response. Our customers benefit by ready access to
this equipment, and we charge each vessel that calls at our St. Eustatius
facility a fee for this capability.

Statia Terminals Canada charters tugs, mooring launches and other vessels
to assist with the movement of vessels through the Straight of Canso, the safe
berthing of vessels at Point Tupper and other services to vessels.

Statia Terminals Canada owns and operates two fully-equipped spill response
vessels on Cape Breton Island in Canada, one located at Point Tupper and the
other located in Sydney, Nova Scotia. In the event of an oil spill, these
vessels can deploy containment and clean-up equipment including skimmers to
retrieve product from the surface of the water, booms to contain spills, and
absorbents to absorb spilled product. We believe that the presence of fully
equipped spill response vessels in port is important in attracting customers to
our facilities.

PRICING

Storage and throughput pricing in the petroleum terminaling industry is
subject to a number of factors, including variations in petroleum product
production and consumption, economic conditions, political developments,
seasonality of demand for particular products and the geographic sector of the
world being serviced. At the customer level, terminal selection focuses
primarily on:

o the location;
o the quality of service; and
o the range of services offered.

Although price is always an issue, price differentials among competing terminals
are frequently less important to the customer because terminaling costs
represent only a small portion of the customer's total distribution costs.

In developing our pricing strategy, we consider petroleum market conditions
and oil price trends. We also take into consideration the quality and range of
our services compared to those of competing terminals, prices prevailing at the
time in the terminaling market in which we operate, and cost savings from
shipping to our terminal locations. In situations requiring special
accommodations for the customer (e.g. unique tank modification or construction
of new tanks), we may price on a rate-of-return basis.

We enter into written storage and throughput contracts with customers.
During 1998, approximately 64% of our storage and throughput revenues, excluding
related ancillary services, were attributable to long term storage and
throughput agreements of one year or more. Our long-term storage and throughput
agreements are individually negotiated with each customer. The typical agreement
specifies tank storage volume, the commodities to be stored, a minimum monthly
charge, an excess throughput charge for throughput volume in excess of the
volume specified in the storage contract and a price escalator. In addition,
there may be charges for additional services such as the transfer, blending,
mixing, heating, decanting and other processing of stored commodities. The
minimum monthly charge is due and payable without regard to the volume of
storage capacity, if any, actually utilized. For the minimum monthly charge, the
user is generally allowed to deliver, store for one month and remove the
specified tank storage volume of commodities. As an incentive for

the user to throughput additional barrels, the excess throughput charge is
typically a lower rate per barrel than the rate per barrel utilized in
establishing the minimum monthly charge. Year-to-year escalation of charges is
typical in long-term contracts.

INFORMATION BY LOCATION

ST. EUSTATIUS, NETHERLANDS ANTILLES

We own a terminaling facility located on the Netherlands Antilles island of
St. Eustatius which is located at a point of minimum deviation from major
shipping routes. St. Eustatius is approximately 1,900 miles from Houston, 1,500
miles from Philadelphia, 550 miles from Amuay Bay, Venezuela, and 1,100 miles
from the Panama Canal. This facility is capable of handling a wide range of
petroleum products, including crude oil and refined products. A three-berth
jetty, a two-berth monopile with platform and buoy systems, a floating hose
station and an offshore single point mooring buoy with loading and unloading
capabilities serve the terminal's customers' vessels.

This facility has 27 tanks with a total capacity of 5.2 million barrels
dedicated to fuel oil storage, 15 tanks with total capacity of 1.1 million
barrels dedicated to petroleum products storage, a 15,000 barrel butane sphere,
and eight tanks totaling 5.0 million barrels dedicated to multigrade crude oil
storage. The fuel oil and petroleum product facilities have in-tank and in-line
blending capability. The crude storage is the newest portion of the facility,
construction of which was completed in early 1995 by a subsidiary of Chicago
Bridge & Iron Company. The storage tanks comply with construction standards that
meet or exceed American Petroleum Institute, National Fire Prevention
Association and other material industry standards. Crude oil movements at the
terminal are fully-automated. In addition to the storage and blending services
at St. Eustatius, this facility has the flexibility to utilize some storage
capacity for both feedstock and refined products to support its atmospheric
distillation unit, which is capable of processing up to 15,000 barrels per day
of feedstock, ranging from condensates to heavy crude oil.

The St. Eustatius facility can accommodate the world's largest vessels for
loading and discharging crude oil. The single point mooring system can handle a
single fully-laden vessel of up to 520,000 dead weight tons, which is a marine
vessel's cargo carrying capacity, with a draft of up to 120 feet. The single
point mooring system can discharge or load at rates in excess of 100,000 barrels
of crude oil per hour. There are six pumps connected to the single point mooring
system, each of which can pump up to 18,000 barrels per hour from the single
point mooring system to the storage tanks. The jetty at St. Eustatius can
accommodate three vessels simultaneously. The south berth of the jetty can
handle vessels of up to 150,000 dead weight tons with a draft of up to 55 feet.
The north berth of the jetty can handle vessels of up to 80,000 dead weight tons
with a draft of up to 55 feet. There is also a barge loading station on the
jetty. At the south and north berths of the jetty, 25,000 barrels per hour of
fuel oil can be discharged or loaded. To accommodate the needs of our gasoline
blending customers, we have recently completed installation of a monopile with
platform that can handle vessels of up to 40,000 dead weight tons with a draft
of up to 46 feet. The monopile with platform can handle two vessels
simultaneously and can discharge or load 12,000 barrels per hour of refined
products. In addition, this facility has a floating hose station that we use to
load bunker fuels onto our barges for delivery to customers. We believe that the
speed at which our facility at St. Eustatius can load crude oil and petroleum
products off of or onto vessels gives us a competitive advantage due to
reductions in the time ships spend idle in ports.

Notwithstanding periods of unusually adverse market conditions, including
the backwardation which persisted from the first quarter of 1995 to the fourth
quarter of 1997, the average percentage of our available capacity that we leased
at the St. Eustatius facility for each of the years ended 1996, 1997, and 1998
was 80%, 76% and 92% respectively. We believe that cost advantages associated
with the location of our facility, shipping economies of scale, product blending
capabilities and the availability of a full range of ancillary services at the
facility has driven the demand for our storage services. Storage capacity at the
St. Eustatius facility has grown from 2.0 million barrels of fuel oil storage in
1982 to its present capacity of 11.3 million barrels for crude oil and petroleum
products.

The ability to blend a comprehensive range of refined products from
gasoline through residual fuel oils has contributed to our success in leasing
the

facility's tankage. We have generally leased our refined product tanks at or
near full capacity on a continuous basis. We have worked closely with residual
fuel oil market participants to assist them with their blending operations by
offering a selection of product blending components and computerized blending
services. We have a five-year contract, which is subject to renewal for an
additional term of 5 years at the customer's discretion, with Bolanter
Corporation, a subsidiary of Saudi Aramco, for 5.0 million barrels of dedicated
crude oil storage. Bolanter uses this storage to service a number of its
customers in the Western Hemisphere. The terminal enables Bolanter to transport
various grades of crude oil closer to market, at competitive transportation
rates.

Recognizing the strategic advantage of its location in the Caribbean near
major shipping lanes, we deliver bunker fuel to vessels at our St. Eustatius
facility. The bunkering business has evolved from offering fuels to ships at the
berth to a delivery system utilizing specially modified barges that provide fuel
to vessels at anchorage. The location of the terminal on the leeward side of the
island, which provides natural protection for ships, generally favorable
year-round weather conditions and deep navigable water at an anchorage
relatively close to shore, attracts ships to this facility for their bunker fuel
requirements. Four of our barges support the bunker fuel sales operation.

During 1998, we commissioned an atmospheric distillation unit at St.
Eustatius. The unit is capable of processing up to 15,000 barrels per day of
feedstock ranging from condensates to heavy crude oil. This distillation unit
can produce naphtha, distillate (heating oil) and residual fuel oil. We believe
that the capability to process feedstock for third parties may create
opportunities for us.

We own and operate all of the berthing facilities at our St. Eustatius
terminal for which we charge vessels a dock charge. Vessel owners or charterers
may incur separate charges for facilities use and associated services such as
pilotage, tug assistance, line handling, launch service, emergency and spill
response and ship services.

POINT TUPPER, NOVA SCOTIA, CANADA

We own a terminaling facility located at Point Tupper in the Strait of
Canso, near Port Hawkesbury, Nova Scotia, Canada, which is located at a point of
minimal deviation from major shipping routes. Point Tupper is approximately 700
miles from New York City, 850 miles from Philadelphia and 2,500 miles from
Mongstad Terminal in Norway. This facility operates the deepest independent
ice-free marine terminal on the North American Atlantic coast, with access to
the U.S. East coast, Canada and the Midwestern U.S. via the St. Lawrence Seaway
and the Great Lakes system. The Point Tupper facility can accommodate
substantially all of the largest fully laden very-large and ultra-large crude
carriers for loading and discharging.

We renovated our facilities at Point Tupper and converted a former oil
refinery site into an independent storage terminal. This work, performed
primarily by a subsidiary of Chicago Bridge & Iron Company, began in 1992 and
was completed in 1994. The tanks were renovated to comply with construction
standards that meet or exceed American Petroleum Institute, National Fire
Prevention Association and other material industry standards.

We believe that our dock at Point Tupper is one of the premier dock
facilities in North America. The outer berth of the Point Tupper facility's
dock, Berth One, can handle fully laden vessels of up to 400,000 dead weight
tons with a draft of up to 84 feet. At Berth One, approximately 75,000 barrels
per hour of crude oil, approximately 40,000 barrels per hour of diesel or
gasoline, or 12,000 barrels per hour of fuel oil can be discharged or loaded.
Berth Two can accommodate vessels of up to 80,000 dead weight tons with drafts
of up to 40 feet. At Berth Two, approximately 25,000 barrels per hour of crude
oil, approximately 25,000 barrels per hour of diesel or gasoline, or
approximately 25,000 barrels per hour of fuel oil can be discharged or loaded.
Liquid movement at the terminal is fully automated. The Point Tupper facility
can accommodate two vessels simultaneously. We charge separately for the use of
the dock facility as well as associated services, including pilotage, tug
assistance, line handling, launch service, spill response and ship services.

The berths at the dock at the Point Tupper facility connect to a 7.4
million barrel tank farm. The terminal has the capability of receiving and
loading crude oil, petroleum products and particular petrochemicals. This
facility has eight tanks with a combined capacity of 3.6 million barrels
dedicated to multigrade crude oil storage, two tanks with a combined capacity of
0.5 million barrels dedicated to fuel oil storage and 24 tanks with a combined
capacity of 3.3 million barrels dedicated to

petroleum products storage, including gasoline, gasoline blend components,
diesel and distillates. During 1997, approximately two-thirds of the storage
tanks dedicated to petroleum products were converted to crude oil storage. The
facility also has a 55,000 barrel butane storage sphere. This sphere is one of
the largest of its kind in North America, and we expect it to enhance our
petroleum products blending operations. The average capacity leased at the Point
Tupper facility over each of the last three years ended 1996, 1997, and 1998 was
55%, 70% and 93%, respectively.

In order to comply with our safe handling procedures and Canadian
environmental laws, we own and operate two fully equipped spill response vessels
on Cape Breton Island, one located at Point Tupper and the other located in
Sydney. In addition to these vessels, we have the capability to respond to
spills on land or water with a combined spill response capability of over 2,500
metric tons at this terminal location. An additional 7,500 metric ton spill
response capability is immediately available at Point Tupper by agreement with
another response organization. Our customers benefit by ready access to the
equipment. In 1995, one of our subsidiaries was granted Canadian Coast Guard
certification as a response organization with spill response capabilities.
Consequently, vessels calling in the Strait of Canso are required to pay us a
subscription fee for access to the services provided by the spill response
organization, even if they do not dock at our terminal.

There are two truck racks at the Point Tupper facility. The north truck
rack has the capability to load 550 barrels per hour of fuel oil and the south
truck rack has the capability to load 550 barrels per hour of fuel oil or up to
550 barrels per hour of diesel.

In 1994, a predecessor to one of our subsidiaries entered into a long term
storage contract with a large oil refiner, Tosco Corporation. The contract
contains two five-year renewal options at the customer's discretion. The
contract commits 3.6 million barrels of crude oil storage at the Point Tupper
facility, representing approximately 49% of the terminal's total capacity. Tosco
recently exercised its option to extend the contract into 2004. A portion of the
remaining tanks at the Point Tupper facility, initially designed for the storage
of gasoline, distillates, aviation fuel and other petroleum products, was
converted during 1997 to crude oil storage and leased. Currently, 71% of this
facility's tankage is dedicated to crude oil, 23% to clean, refined products and
6% to residual fuel oil.

In the first quarter of 1996, we initiated the offering of bunkering
services at Point Tupper. Delivery of bunker fuel at Point Tupper is currently
being made via pipeline to vessels transferring cargo at the berths and via
truck to vessels in the surrounding area.

In 1998, we entered into a 25 year land lease on a portion of our land at
Point Tupper and a 12 year product storage agreement with Sable Offshore Energy,
Inc. The lease provides options to extend for two additional 25 year periods.
Sable is leasing the site, building a natural gas liquids fractionation plant,
storage and rail handling facilities on the site, and leasing over 500,000
barrels of our existing storage capacity. The fractionation plant will process
an average of 20,000 barrels per day of natural gas liquids extracted from the
Sable Island region of Nova Scotia, Canada, and delivered via pipeline for the
fractionation plant from Sable's Goldboro Gas Processing Plant in Guysborough
County, Nova Scotia. While the natural gas liquid volumes will vary according to
field source and production rates, the fractionation plant is expected to
produce about 10,300 barrels per day of condensate (light oil), 6,250 barrels a
day of propane, and about 3,250 barrels per day of butane. The fractionation
plant is currently under construction and is expected to be completed by
November 1999.

We are finalizing a land exchange agreement with the Province of Nova
Scotia conveying particular land we own at the Point Tupper terminal site to the
Province of Nova Scotia in exchange for the conveyance by the Province of Nova
Scotia of unused road rights-of-way on our remaining property at Point Tupper.
The land being transferred to the Province is principally the approximately
1,296 acres comprising Lake Landrie and adjacent watershed land.

COMPETITION

The main competition to crude oil storage at our facilities is from
lightering. Under current market conditions, lightering in most instances costs
less than terminaling. The price differential between lightering and terminaling
is primarily driven by the charter rates for vessels of various sizes because
terminaling generally occupies a very-large or ultra-large crude carrier for a
shorter period of time than lightering. A very-large crude carrier can be
lightered in approximately four days if lightering vessels are available for
continuous back to back operations and the weather is good. However, if fewer
lightering vessels are available or bad weather interrupts, it can take longer
to load or discharge product. Depending on charter rates, the longer charter
period associated with lightering is generally offset by various costs
associated with terminaling including storage costs, dock charges and spill
response fees. In addition, terminaling reduces the risk of environmental damage
associated with lightering.

The independent terminaling industry is fragmented and includes both large,
well-financed companies that own many terminal locations, and smaller companies
that may own a single terminal location. We are a member of the Independent
Liquid Terminals Association, which among other functions, publishes a directory
of terminal locations of its members throughout the world. Customers with
specific geographic and other logistical requirements may use the ILTA directory
to identify the terminals in the region available for specific needs and to
select the preferred providers on the basis of service, specific terminal
capabilities and environmental compliance.

In addition to the terminals owned by independent terminal operators, many
state-owned oil producers and major energy and chemical companies also own
extensive terminal facilities, and these terminals often have the same
capabilities as terminals owned by independent operators. While the purpose of
such terminals is to serve the operations of their owners, and they do not
customarily offer terminaling services to third parties, these terminals
occasionally are made available to the market when they have unused capacity on
a short term and irregular basis. Such terminals lack competitive advantages of
independent operators, the most important of which is confidentiality.

In many instances, major energy and chemical companies that own storage and
terminaling facilities are also significant customers of independent terminal
operators. Such companies typically have strong demand for terminals owned by
independent operators when independent terminals have more cost-effective
locations near key transportation links such as deep-water ports. Major energy
and chemical companies also need independent terminal storage when their captive
storage facilities are inadequate, either because of size constraints, the
nature of the stored material or specialized handling requirements.

Independent terminal owners compete based on the location and versatility
of their terminals, service and price. A favorably located terminal will have
access to cost-effective transportation both to and from the terminal. Possible
transportation modes include waterways, railroads, roadways and pipelines.

Terminal versatility is a function of the operator's ability to offer safe
handling for a diverse group of products with potentially complex handling
requirements. The primary service function provided by the terminal is the safe
storage and return of all of the customer's product while maintaining product
integrity. Terminals may also provide additional services, such as heating,
blending, water removal and processing with assurance of proper environmental
handling procedures or vapor control to reduce evaporation.

We believe our competitors to our terminaling business include:

STORAGE CAPACITY
NAME(1) LOCATION (BARRELS)
- ---------------------------------------------------------------------------- -------------------- --------------------------

ST. EUSTATIUS
Baprovin (BORCO).......................................................... Bahamas 10,475,000(2)
Bonaire Petroleum Corp. N.V............................................... Bonaire, N.A. 10,100,000(2)
Commonwealth Oil Refining Company (CORCO)................................. Puerto Rico 12,000,000(3)
South Riding Point Holding, Ltd........................................... Bahamas 5,200,000

POINT TUPPER
International-Matex Tank Terminals........................................ Bayonne, NJ 14,000,000
GATX Terminals Corporation................................................ Carteret, NJ 6,652,000
South Riding Point Holding, Ltd........................................... Bahamas 5,200,000
Stolthaven Perth Amboy Inc................................................ Perth Amboy, NJ 2,146,000(4)
International-Matex Tank Terminals........................................ Quebec City, Canada 1,270,000
Multiple.................................................................. NY/NJ Harbor (greater than)35,000,000

- ------------------

Source: OPIS Directories Petroleum Terminal Encyclopedia 1999, Tenth Edition,
unless otherwise specified.

(1) Does not include captive terminals other than those which provide to third
parties a significant amount of their capacity on a somewhat regular basis.
Captive terminals are generally used almost exclusively for the operations
of the producers, refiners or pipeline operators who own them and are only
occasionally made available to the market on a short term basis. Captive
terminals lack competitive advantages of independent operations, the most
important of which is confidentiality. See "Industry."

(2) Information provided to us by a source we believe to be reliable.

(3) We believe such storage capacity to be less than fully useable.

(4) Source: OPIS Petroleum Terminal Encyclopedia, Ninth Edition.

In our bunkering business, we compete with the ports to which or from which
each vessel travels or bypasses.

CUSTOMERS

Our customers include many of the world's largest producers of crude oil,
integrated oil companies, oil traders, refiners, petrochemical companies and
ship owners.

We presently have several significant long term contracts at St. Eustatius,
including a five-year contract with a five-year renewal option at the customer's
discretion with Bolanter Corporation, N.V., which became effective in early
1995. Bolanter Corporation is a subsidiary of Saudi Aramco. This storage and
throughput contract commits all of the St. Eustatius facility's current crude
oil storage capacity to Bolanter, which represents approximately 44% of the
terminal's total capacity and 7.4% of our 1998 revenues, with an additional 7.7%
of our 1998 revenues derived from parties unaffiliated with Bolanter but
generated by the movement of Bolanter's products through the St. Eustatius
terminal. In addition, revenues from another affiliate of Saudi Aramco which
received bunker fuels at our St. Eustatius facility accounted for 1.5% of our
total 1998 revenues.

In addition, we presently have several significant long term contracts at
Point Tupper, including a five-year contract with two five-year renewal options,
at the customer's discretion, with a major refiner, a subsidiary of Tosco
Corporation. This contract became effective in August 1994, and Tosco recently
exercised its option to extend the contract into 2004. This contract commits
approximately 49% of the present tank capacity at Point Tupper. It represented
approximately 7.1% of our 1998 revenues, with an additional 1.9% of our 1998
revenues being derived from parties unaffiliated with Tosco but generated by the
movement of Tosco's products through the Point Tupper terminal.

In addition, we have another terminaling services customer which
represented 5.2% of our 1998 revenues. We also supply bunker fuel to a customer
which represented 8.5% of our 1998 revenues.

No other customer accounted for more than 5% of our total 1998 revenues.

SUPPLIERS

We presently have a bunker fuel supply contract at St. Eustatius with a
major state-owned oil producer, which became effective in 1992 and was recently
renewed until February 28, 2000. This contract presently provides us with the
majority of the fuel oil necessary to support our bunker and bulk product sales
requirements. We procure the balance of our fuel oil and other supplies
necessary for our operations from various sources. We believe that suitable
alternate sources of supply are readily available from which we can procure fuel
oil should deliveries under our current contract be interrupted or are not
renewed. However, such alternative sources of supply are subject to changing oil
market conditions and prices.

At Point Tupper, we are attempting to secure an adequate source of supply
for our bunker fuel sales business to enable significant increases in volumes
for delivery to vessels calling at this facility.

ENVIRONMENTAL, HEALTH AND SAFETY MATTERS

Our subsidiaries are subject to comprehensive and periodically changing
environmental, health and safety laws and regulations within the jurisdictions
of our operations, including those governing oil spills, emissions of air
pollutants, discharges of wastewater and storm waters, and the disposal of
non-hazardous and hazardous waste. We believe we are presently in substantial
compliance with applicable laws and regulations governing environmental, health
and safety matters. We have taken measures to mitigate our exposure to
environmental risks including automation and monitoring equipment, employee
training, maintaining our own emergency and spill response equipment at each
terminal and maintaining liability insurance for some, but not all, accidental
spills. The following table shows our capital expenditures in millions of
dollars for compliance with environmental laws and regulations and routine
operational compliance costs for the periods indicated.

CAPITAL ROUTINE OPERATIONAL
PERIOD EXPENDITURES COSTS
- ------------------------------------------------------------------------------- ------------ -------------------

1996........................................................................... $1.3 $ 0.4
1997........................................................................... 1.3 0.2
1998........................................................................... 2.7 0.9

ST. EUSTATIUS

Until recently, the St. Eustatius terminal has not been subject to
significant environmental, health and safety regulations, and health, safety and
environmental audits have not been required by law. No environmental or health
and safety permits are required for the St. Eustatius terminal except under the
St. Eustatius Nuisance Ordinance. A license under the St. Eustatius Nuisance
Ordinance was issued to us in February 1997 subject to compliance with
particular requirements. The requirements established by the license set forth
specific environmental standards for operation of the facility, including
monitoring of air emissions, limits on and monitoring of waste-water discharges,
establishment of a waste-water treatment system, standards for above-ground
storage tanks and tank pits, reporting and clean-up of any soil or water
pollution and specific site security measures. To date, we have complied with
the license requirements and do not expect further compliance to have a material
adverse effect on our business and financial condition, results of operations or
our ability to make the target quarterly distribution. We will address future
improvements to the facility that may be necessary to comply with new
environmental, health and safety laws and regulations, if any, as they arise.

The St. Eustatius terminal management and consultants supervise the on and
off-site disposal and storage of hazardous waste materials. The nature of our
business is such that spills of crude oil or petroleum products may occur at the
terminal periodically. Over the past three years, all spills at the St.
Eustatius terminal were reported to the appropriate environmental authorities
and have not resulted in any citations by such authorities for

violations of law. We have remediated all such spills.

Two government inspections were performed during each of 1997 and 1998 with
no citations issued.

POINT TUPPER

The Point Tupper terminal is subject to a variety of environmental, health
and safety regulations administered by the Canadian federal government and the
Nova Scotia Department of Environment. While air emission monitoring is not
required by the NSDOE, surface water discharge outfall and groundwater
monitoring are required and are performed on a routine basis in accordance with
current requirements of the permit issued by NSDOE. We believe we have all
requisite environmental permits in place. The principal permit is the Industrial
Waste Treatment Works Permit last issued by the NSDOE on March 8, 1999 and
expiring December 31, 2008. The nature of our business is such that spills of
crude oil or refined products may occur at the terminal periodically. Over the
past three years, all spills at the Point Tupper terminal were reported and
remediated to the satisfaction of the applicable agencies and have not resulted
in any citations by such authorities. Statia Terminals Canada has recently
discovered a leak in one tank, has emptied the tank and is in the process of
repairing it and remediating the spillage.

Past uses of the facility by others, including its past operation by others
as an oil refinery, have resulted in particular on-site areas of known and
potential contamination, as described under "Management's Discussion and
Analysis of Financial Condition and Results of Operations--Environmental, Health
and Safety Matters."

EMPLOYEES

As of November 30, 1998, excluding contract labor, we employed 211 people.
Forty employees were located in the U.S., 98 on St. Eustatius, and 73 at Point
Tupper. A majority of our employees at both the St. Eustatius and Point Tupper
facilities are unionized. We believe that our relationships with our employees
are good. We have never experienced a material labor related business
disruption.

ST. EUSTATIUS

The Windward Islands Federation of Labor represents the majority of hourly
workers at St. Eustatius. We entered into an agreement with WIFOL on June 1,
1993, which extended to May 31, 1996. The agreement provided for automatic one
year extensions if neither party requested an amendment. We have not requested
or received any requests for an extension. We believe that the agreement no
longer binds us, but we continue to provide pay and benefits to the hourly
workers as if the agreement was still in effect. In early 1997, management and a
select group of supervisory and office personnel at St. Eustatius discussed
organizing into a collective bargaining group. We believe these matters will not
materially impact our business and financial condition, results of operations or
ability to make the target quarterly distribution.

POINT TUPPER

The Communications, Energy and Paperworkers Union represents a majority of
Point Tupper's hourly work force. During 1995, we signed a three-year agreement
with CEPU that expired on September 30, 1998. We are currently negotiating with
CEPU with the aid of a government-appointed conciliator and continuing our
operations without an agreement. We believe these matters will not materially
impact our business and financial condition, results of operations or ability to
make the target quarterly distribution.

We have experienced two minor work stoppages in the last four years. In
April 1994, employees stopped working for approximately one-half of a day to
protest alleged inadequate safety conditions at the facility. The following
April, electricians picketed for approximately two hours to protest the
employment of non-union workers on one project. Most of the workers at the
facility were unaffected by the activity.

LEGAL PROCEEDINGS

See "Management's Discussion and Analysis of Financial Condition and
Results of Operations--Legal Proceedings."

INSURANCE

Our property insurance covers damage to the real and personal property
located at our two terminals and administrative offices. The property loss limit
is $150 million with a $0.1 million deductible, except for a $0.5 million
deductible for some losses caused by natural forces, such as wind, flood and
earthquake, at St. Eustatius. We carry various layers of liability coverage of
up to $200 million with a deductible of approximately $0.3 million, including
coverage for liabilities associated with some accidental spills. We carry
$30 million of coverage on the offshore single point mooring system at St.
Eustatius with a deductible of approximately $0.3 million. We have coverage up
to scheduled values for damage to our marine vessels with a $50,000 deductible.
We also carry other insurance customary in the industry.

Our current insurance program commenced December 31, 1998 and generally
extends 15 months.

We believe that the cost of business interruption insurance does not
warrant carrying it under current market conditions. Therefore, we do not have,
and do not plan to carry, business interruption insurance except with respect to
our offshore single point mooring system.

MANAGEMENT
DIRECTORS AND EXECUTIVE OFFICERS

At the closing, the board of directors of Statia Terminals Group will be
divided into 3 classes. The directors serve six year terms which are staggered
such that approximately one-third of the directors are elected every two years.
The board of directors of Statia Terminals Group duly elects the executive
officers to serve until their respective successors are elected and qualified.
The following table sets forth certain information with respect to the
directors and executive officers of Statia Terminals Group:

TERM
NAME AGE POSITION EXPIRES
- ----------------------------------------------- --- ---------------- -------

James G. Cameron(3)............................ 53 Director 2005
John K. Castle(2)(3)........................... 58 Director 2005
Admiral James L. Holloway, III(1).............. 76 Director 2003
Francis Jungers(2)............................. 72 Director 2003
David B. Pittaway(1)(2)(3)..................... 47 Director 2005
Jonathan R. Spicehandler(1).................... 50 Director 2001
Ernest "Jackie" Voges.......................... 67 Director 2001
Justin B. Wender(1)............................ 29 Director 2003
Thomas M. Thompson, Jr......................... 54 Vice President
Robert R. Russo................................ 43 Vice President
James F. Brenner............................... 40 Vice President
and Treasurer
Jack R. Pine................................... 59 Secretary

- ------------------
(1) Member of Audit Committee.
(2) Member of Compensation Committee.
(3) Member of Executive Committee.

Pursuant to a shareholders agreement among all of the shareholders of
Statia Terminals Holdings, which will consist of all of our present owners
except Praxair, the board of directors of Statia Terminals Holdings will
determine how the subordinated shares and any common shares held by Statia
Terminals Holdings will be voted, including voting for directors of Statia
Terminals Group. Under the agreement, these shares must be voted in favor of one
nominee of our executive officers, who must be one of our employees. Statia
Terminals Holdings will be controlled by Castle Harlan and its affiliates.

The directors of Statia Terminals, Inc., an indirect subsidiary of Statia
Terminals Group, are currently elected annually by their shareholders to serve
during the ensuing year or until a successor is duly elected and qualified. The
board of directors of Statia Terminals, Inc. duly elects the executive officers
to serve until their respective successors are elected and qualified.

The following table sets forth certain information with respect to certain
directors and executive officers of Statia Terminals, Inc.:

NAME AGE POSITION
- ------------------------------------------- --- -------------------------------------------

James G. Cameron........................... 53 Director, Chairman of the Board and
President
Thomas M. Thompson, Jr..................... 54 Director and Executive Vice President
Robert R. Russo............................ 43 Director and Senior Vice President
Jack R. Pine............................... 59 Senior Vice President, General Counsel and
Secretary
John D. Franklin........................... 42 Vice President--Marine Fuel Sales
James F. Brenner........................... 40 Vice President--Finance, Treasurer and
Assistant Secretary

James F. Brenner. Mr. Brenner has been Vice President and Treasurer of
Statia Terminals Group since December 23, 1996. Mr. Brenner joined us in 1992,
as our Controller, and was promoted to his present position in May, 1996.
Immediately prior to joining us, he served three years as Vice President,
Finance and Chief Financial Officer of Margo Nursery Farms Inc., a publicly
traded agribusiness firm with European and Latin American operations. From 1986
to 1990, Mr. Brenner was Treasurer of Latin American Agribusiness Development
Corp., a company providing debt and equity financing to agribusinesses
throughout Latin America. His duties included serving as director for several of
its corporate investments. From 1981 to 1986, Mr. Brenner held various positions
with the international accounting firm of PricewaterhouseCoopers (formerly Price
Waterhouse LLP). Mr. Brenner is a licensed Certified Public Accountant in
Florida (inactive status).

James G. Cameron. Mr. Cameron has been a director of Statia Terminals Group
since February 6, 1997. Mr. Cameron has been with us since 1981. From 1981 to
1984, Mr. Cameron served as the Project Manager spearheading the design and
construction of the St. Eustatius terminal facility. Mr. Cameron was promoted in
1984 to Executive Vice President of Statia Terminals, Inc. Since being named
President and Chairman of the Board of Statia Terminals, Inc. in 1993,
Mr. Cameron has served on the board of directors of Tankstore, which was a joint
venture company of CBI Industries, GATX Corporation and Paktank International
B.V. Mr. Cameron has also served on the board of directors of Petroterminal de
Panama, where he represented CBI Industries' ownership in the pipeline
traversing the isthmus of Panama. His prior experience in the petroleum industry
dates back to 1969 when he joined Cities Service Company as a marine engineer.
Mr. Cameron subsequently joined Pakhoed USA, Inc., where he served in a variety
of positions including Project Engineer, Manager of Engineering & Construction,
Maintenance Manager and Terminal Manager, which included the management of
Paktank's largest facility in Deer Park, Texas.

John K. Castle. Mr. Castle has been a director of Statia Terminals Group
since February 6, 1997. Mr. Castle is Chairman and Chief Executive Officer of
Branford Castle, Inc., an investment company formed in 1986. Since 1987,
Mr. Castle has been Chairman of Castle Harlan, Inc., a private merchant bank in
New York City. Mr. Castle is Chief Executive Officer of Castle Harlan Partners
II, G.P. Inc., the general partner of the general partner of Castle Harlan
Partners II L.P., which is our controlling stockholder. Immediately prior to
forming Branford Castle, Inc. in 1986, Mr. Castle was President and Chief
Executive Officer and a director of Donaldson Lufkin & Jenrette, Inc., which he
joined in 1965. Mr. Castle is a director of Sealed Air Corporation, Morton's
Restaurant Group, Inc., Commemorative Brands, Inc. and Universal Compression,
Inc. He is a trustee of the New York Medical College (for 11 years he was
Chairman of the Board), a member of The New York Presbyterian Hospital's Board
of Trustees, a member of the board of the Whitehead Institute for Biomedical
Research and is a member of the Corporation of the Massachusetts Institute of
Technology. Mr. Castle has also served as a director of The Equitable Life
Assurance Society of the United States.

John D. Franklin. Mr. Franklin joined us in March, 1992 as Manager, Marine
Sales and has been the Vice President--Marine Fuel Sales since 1996. He also
serves as a director of Petroterminal de Panama. Immediately prior to joining
us, he was employed for 14 years with The Coastal Corporation, and its former
subsidiary, Belcher Oil Co. Inc. His duties with Coastal included management of
the company's marine sales division; Manager, National Accounts, and Terminal
Manager at Coastal's New Orleans facility. He has extensive experience in
marketing, terminal operations, and technical sales support.

Admiral James L. Holloway III, U.S.N. (Ret.). Adm. Holloway has been a
director of Statia Terminals Group since April 29, 1997. Adm. Holloway is a
retired Naval Officer who served as Chief of Naval Operations and a member of
the Joint Chiefs of Staff from 1974 to 1978. After his retirement, from 1981 to
1989 he was President of the Council of American Flag Ship Operators, a national
trade association representing the owners and operators of U.S. flag vessels in
foreign trade. From 1985 to 1989 he was a member of the President's Blue Ribbon
Commission on Merchant Marine and Defense, and the Commission for a Long Term
Integrated Defense Strategy. In 1986, Admiral Holloway was appointed Special
Envoy of the Vice President to the Middle East and from 1990 to 1992 he served
in a presidential appointment as U.S. Representative to the South Pacific
Commission. Admiral Holloway is currently

Chairman of the Naval Historical Foundation, Chairman of the Naval Academy
Foundation, a Governor of St. Johns College and chairman of the Board of
Trustees of Saint James School.

Francis Jungers. Mr. Jungers has been a director of Statia Terminals Group
since April 29, 1997. Mr. Jungers is a private investor and business consultant
in Portland, Oregon. Mr. Jungers has been a consultant since January 1, 1978.
From 1973 to 1978, he was Chairman and Chief Executive Officer of Arabian
American Oil Company which is the largest producer of crude and liquified gas in
the world and holds the concession for all of Saudi Arabia's oil production.
Mr. Jungers is a director of Georgia Pacific Corporation, Thermo Ecotek
Corporation, Thermo Electron Corporation, ThermoQuest Corporation, ONIX Systems
Corporation, Donaldson, Lufkin & Jenrette, Inc., The AES Corporation and ESCO
Corporation. Mr. Jungers is Chairman of the Advisory Board of Common Sense
Partners, L.P., a hedge fund. Mr. Jungers is a member of the Visiting Committee,
The University of Washington. Mr. Jungers is Advisory Trustee of the Board of
Trustees, The American University in Cairo and Trustee of the Oregon Health
Sciences University Foundation.

Jack R. Pine. Mr. Pine has been Statia Terminals Group's Secretary since
December 23, 1996. Mr. Pine has been involved with our legal affairs since our
inception and was formally transferred to Statia Terminals, Inc. from CBI
Industries, Inc. in May 1996 as Senior Vice President, General Counsel and
Secretary. Mr. Pine also serves as a director of Petroterminal de Panama. He has
over 30 years of combined experience with Liquid Carbonic Industries
Corporation, CBI Industries and us. Mr. Pine joined the legal staff of CBI
Industries in 1974 as Assistant Counsel and was appointed Associate General
Counsel in 1984. Prior to joining CBI Industries, Mr. Pine practiced law in the
private sector.

David B. Pittaway. Mr. Pittaway has been a director of Statia Terminals
Group since September 3, 1996. Mr. Pittaway is Senior Managing Director and has
been Vice President and Secretary of Castle Harlan, Inc. a private merchant bank
in New York City, since February 1987. Mr. Pittaway is an executive officer of
Castle Harlan Partners II, G.P. Inc., the general partner of the general partner
of Castle Harlan Partners II L.P., our controlling stockholder. Mr. Pittaway has
been Vice President and Secretary of Branford Castle, Inc., an investment
company, since October 1986. From 1987 to 1998 he was Vice President and Chief
Financial Officer and a director of Branford Chain, Inc., a marine wholesale
company where he is now a director and Vice Chairman. Mr. Pittaway is also a
director of Morton's Restaurant Group, Inc., Charlie Brown's Holdings, Inc., and
Commemorative Brands, Inc. Prior to 1987, Mr. Pittaway was Vice President of
Strategic Planning and Assistant to the President of Donaldson Lufkin &
Jenrette, Inc.

Robert R. Russo. Mr. Russo has been a Vice President of Statia Terminals
Group since December 23, 1996. Mr. Russo joined us in 1990 as Manager, Sales,
and was promoted to his present position in May, 1996. His prior experience in
the petroleum industry dates back to 1979 when he joined Belcher Oil Co. Inc., a
subsidiary of The Coastal Corporation. Mr. Russo was Coastal's Vice President,
Heavy Products Trading, from 1987 until his departure to join us in 1990.

Jonathan R. Spicehandler, M.D. Dr. Spicehandler has been a director of
Statia Terminals Group since April 29, 1997. Since 1993, Dr. Spicehandler has
been President of Schering-Plough Research Institute, the pharmaceutical
research arm of Schering-Plough Corporation, a research based company engaged in
the discovery, development, manufacturing and marketing of pharmaceutical and
health care products worldwide. Dr. Spicehandler is a diplomat of the American
Board of Internal Medicine. He was also elected to the Alpha Omega Alpha Honor
Society. He serves as president emeritus, board of managers, of the New Jersey
division of Cancer Care, Inc. Dr. Spicehandler is a member of the boards of
trustees of the Kessler Institute for Rehabilitation, Inc. and Montclair State
University. He also serves on the board of directors of the National Foundation
of Infectious Diseases and on the Science Policy Board of the Liberty Science
Center. Dr. Spicehandler is a member of the board of associates of the Whitehead
Institute for Biomedical Research.

Thomas M. Thompson, Jr. Mr. Thompson has been a Vice President of Statia
Terminals Group since December 23, 1996. Mr. Thompson has been with us since
1985 when he joined as Vice President, Sales & Marketing. He has also held the
position of Senior Vice President, with full

responsibility for our Houston, Texas, sales and operations and President of
JASTATIA, Inc., a marine vessel operating joint venture between Jahre Ship
Services A/S and us. Mr. Thompson became Executive Vice President in May, 1996.
His prior experience in the petroleum and chemical industry dates back to 1968
when he joined GATX Corporation as a sales representative. He subsequently
worked as both a sales manager and General Manager with Pakhoed USA, Inc.

Ernest "Jackie" Voges. Mr. Voges has been a director of Statia Terminals
Group since February 2, 1998. From 1982 to 1996, Mr. Voges was General Managing
Director of the Curacao Ports Authority. From 1977 to 1982, Mr. Voges held
various positions including Dean of the Law School of the University of the
Netherlands Antilles, permanent lecturer for the history of law and a member of
the International Advisory Council of Florida International University. From
1973 to 1977, he served in various positions within the government for Land
Territory of the Netherlands Antilles including Vice Prime Minister, Minister of
Justice and Minister of Transport and Communications. From 1967 to 1969
Mr. Voges served as Minister of Public Health. From 1959 to 1967, he was a
member of the Island Council of the Island Territory of Curacao and from 1966 to
1967 he was Commissioner of the Island Territory of Curacao. Mr. Voges is
Managing Director of Leeward News Holding N.V., Chairman of the Foundation
Stichting Monumentenzorg Curacao and Supervisory Director of Stadsherstel
Corporation N.V. He is also Chairman of the Foundation Stichting JEKA,
Supervisory Director of Smit International Corporation N.V., and Managing
Director of Voges Inc. Corporation N.V. In 1979, Mr. Voges was Knighted in the
Order of the Dutch Lion.

Justin B. Wender. Mr. Wender has been a director of Statia Terminals Group
since September 3, 1996. Since 1993, he has been employed by Castle Harlan, Inc.
He currently serves as Director. From 1991 to 1993, Mr. Wender worked in the
Investment Banking Group of Merrill Lynch & Co. He is a board member of Charlie
Brown's Holdings, Inc. and Land 'N' Sea Holdings, Inc.

EXECUTIVE COMPENSATION

The following table sets forth information concerning the compensation paid
or accrued for the year ended December 31, 1998 for our chief executive officer
and each of our five other most highly compensated executive officers (the
"named executive officers").

LONG TERM COMPENSATION AWARDS
------------------------------------------
SHARES LONG-TERM
ANNUAL COMPENSATION RESTRICTED UNDERLYING INCENTIVE
NAME AND PRINCIPAL -------------------- OTHER ANNUAL STOCK OPTIONS/SARS PLAN
POSITION(1) YEAR SALARY($) BONUS($) COMPENSATION($)(2) AWARDS($)(3)(4) (#SHARES)(5) PAYOUTS($)
- ------------------------- ---- --------- -------- ------------------ --------------- ------------ ---------

James G. Cameron......... 1998 275,482 211,875 -- -- 615 --
1997 248,655 97,050 -- -- 630 --
1996 215,000 -- -- 919,000 -- --

Thomas M.
Thompson, Jr........... 1998 241,549 173,750 -- 490 --
1997 208,434 79,000 -- -- 500 --
1996 169,260 -- -- 695,000 -- --

Robert R. Russo.......... 1998 199,232 145,000 -- 425 --
1997 178,883 68,400 -- -- 430 --
1996 150,936 -- -- 625,000 -- --

Jack R. Pine............. 1998 161,929 97,500 -- -- 185 --
1997 129,450 51,550 -- -- 190 --
1996 115,190 11,500 -- 311,000 -- --

John D. Franklin......... 1998 139,616 97,500 -- -- 185 --
1997 128,653 49,250 -- -- 190 --
1996 94,967 4,500 -- 238,000 -- --

James F. Brenner......... 1998 130,289 91,250 57,587 -- 175 --
1997 108,895 43,400 -- -- 165 --
1996 81,252 -- -- 212,000 -- --

NAME AND PRINCIPAL ALL OTHER
POSITION(1) COMPENSATIONS($)(6)
- ------------------------- -------------------

James G. Cameron......... 69,525
68,077
52,229
Thomas M.
Thompson, Jr........... 16,677
15,449
1,440
Robert R. Russo.......... 13,816
12,680
510
Jack R. Pine............. 11,410
10,648
450
John D. Franklin......... 10,784
10,059
479
James F. Brenner......... 10,941
9,033
43

- ------------------
(1) James G. Cameron became President and Chairman of the Board of Statia
Terminals, Inc. on July 27, 1993. Thomas M. Thompson, Jr. became Executive
Vice President of Statia Terminals, Inc. on May 6, 1996. Robert R. Russo
became Senior Vice President of Statia Terminals, Inc. on May 6, 1996. Jack
R. Pine became Senior Vice President, General Counsel and Secretary of
Statia Terminals, Inc. on May 6, 1996. James F. Brenner became Vice
President Finance, Treasurer and Assistant Secretary of Statia Terminals,
Inc. on May 6, 1996.

(2) The compensation reported for 1998 represents $35,923 of relocation expenses
and $21,664 of tax reimbursements paid to Mr. Brenner.

(3) In November 1996, Statia Terminals N.V. awarded a total of $3.0 million of
its preferred stock to James G. Cameron (919 shares), Thomas M.
Thompson, Jr. (695 shares), Robert R. Russo (625 shares), Jack R. Pine (311
shares), John D. Franklin (238 shares) and James F. Brenner (212 shares).
This award of Statia Terminals N.V. preferred stock was subject to a
specified restriction period which commenced on the date of the award, and
other conditions set forth in the restricted stock award agreement between
Statia Terminals N.V. and the recipient of such stock. Each recipient
surrendered each of his shares of Statia Terminals N.V. preferred stock in
exchange for a unit consisting of one share of Statia Terminals Group's
common stock and one share of Series E Preferred Stock. The units were also
subject to substantially similar restrictions and conditions as the Statia
Terminals N.V. preferred stock, as set forth in a restricted unit award
agreement between Statia Terminals Group and each such recipient. Prior to
the expiration of the restriction period, recipients could not sell,
transfer, pledge, assign, encumber or otherwise dispose of their units. Such
restriction periods applicable to Statia Terminals Group's stock comprising
such units lapsed, pursuant to the award agreements, in November 1998.

(4) The table does not include loans to executive officers by Statia Terminals
Group secured by restricted units of Statia Terminals Group's preferred and
common stock. (See "Stockholder Loans" below.)

(5) Represents options to purchase Statia Terminals Group common stock awarded
under the 1997 Stock Option Plan. The fair values at the dates of grant,
November 21, 1997 and December 3, 1998, were determined by the compensation
committee of Statia Terminals Group's board of directors to be $0.10 per
share and $0.10 per share for the 1997 and 1998 grants. The award agreement
specifies that after two years of employment after the date of grant and
after each of the following three years, 25% of the option shall become
exercisable unless a liquidation event occurs (as defined in the award
agreement). If a liquidation event occurs, the option shall become fully
exercisable. The option will terminate upon the employee's termination of
employment except in the event of death, permanent disability or termination
by us other than for substantial cause. Each option shall expire ten years
after the date of grant.

(6) The compensation reported for 1998 represents: (a) the dollar value of split
dollar life insurance benefits paid by us, (b) matching and discretionary
contributions made to our 401(k) plan and (c) the cost of life insurance in
excess of limits prescribed by the Internal Revenue Code. These benefits,
expressed in the same order as listed in the preceding sentence, amounted to
$50,789, $16,000 and $2,736 for Mr. Cameron; $0, $14,200 and $2,477 for
Mr. Thompson; $0, $13,000 and $816 for Mr. Russo; $0, $10,600 and $810 for
Mr. Pine; $0, $10,600 and $184 for Mr. Franklin; and $0, $10,400 and $541
for Mr. Brenner.

OPTION GRANTS DURING YEAR ENDED DECEMBER 31, 1998

The following table sets forth particular information regarding options
granted to the named executive officers during 1998. We have not granted any
stock appreciation rights.

INDIVIDUAL GRANTS
----------------------------------------------------
% OF
TOTAL
NUMBER OF OPTIONS POTENTIAL REALIZABLE VALUE AT ASSUMED
SHARES GRANTED ANNUAL RATES OF STOCK APPRECIATION
UNDERLYING TO FOR OPTION TERM
OPTIONS EMPLOYEES EXERCISE MARKET EXPIRATION ---------------------------------------
NAME GRANTED IN 1998 PRICE PRICE(1) DATE 0% 5% 10%
- -------------------------- ---------- --------- -------- ------- ---------- ----------- ----------- -------------

James G. Cameron.......... 615 21.2% $ 0.10 $810.00 12/3/08 $498,088.50 $811,372.36 $1,292,011.31
Thomas M.
Thompson, Jr............ 490 16.9% 0.10 810.00 12/3/08 396,851.00 646,459.28 1,029,407.38
Robert R. Russo........... 425 14.7% 0.10 810.00 12/3/08 344,207.50 560,704.48 892,853.34
Jack R. Pine.............. 185 6.4% 0.10 810.00 12/3/08 149,831.50 244,071.36 388,653.81
John D. Franklin.......... 185 6.4% 0.10 810.00 12/3/08 149,831.50 244,071.36 388,653.81
James F. Brenner.......... 175 6.0% 0.10 810.00 12/3/08 141,732.50 230,878.31 367,645.49

- ------------------

(1) The market price on the date of grant, December 3, 1998, was determined
based on a valuation performed at our request by an independent consulting
firm which specializes in these matters.

OPTION EXERCISES AND YEAR-END VALUES

The following table sets forth particular information concerning options to
purchase common stock exercised by the named executive officers during 1998 and
the number and value of unexercised options held by each of the named executive
officers at December 31, 1998.

AGGREGATED OPTION EXERCISES IN THE YEAR ENDED DECEMBER 31, 1998
AND YEAR-END OPTION VALUES

NUMBER OF SHARES UNDERLYING VALUE OF UNEXERCISED
SHARES UNEXERCISED OPTIONS AT IN-THE-MONEY OPTIONS AT
ACQUIRED DECEMBER 31, 1998 DECEMBER 31, 1998(1)
ON VALUE ------------------------------- ----------------------------
NAME EXERCISE REALIZED EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ----------------------------------- -------- -------- ----------- ---------------- ----------- -------------

James G. Cameron................... 0 0 0 1,245 0 $983,425.50
Thomas M. Thompson, Jr............. 0 0 0 990 0 782,001.00
Robert R. Russo.................... 0 0 0 855 0 675,364.50
Jack R. Pine....................... 0 0 0 375 0 296,212.50
John D. Franklin................... 0 0 0 375 0 296,212.50
James F. Brenner................... 0 0 0 340 0 268,212.50

- ------------------

(1) There was no public trading market for Statia Terminals Group's common stock
as of December 31, 1998. The market price of the common stock on
December 31, 1998 was determined based on a valuation performed as of
December 3, 1998 at our request by an independent consulting firm. The
indicated market price as of December 3, 1998 of $810 per share was reduced
to $790 per share as of December 31, 1998 primarily due to additional
dividends accrued on the Statia Terminals Group's preferred stock during
this period. Preferred stock dividends reduce the equity value of common
stockholders.

OLD STOCK OPTION PLAN

Statia Terminals Group's 1997 Stock Option Plan will terminate at the
closing of this offering. Options to purchase an aggregate of 6,145 shares of
common stock have been issued under this plan. All of such options have an
exercise price of $0.10 per share. None of such options have been exercised, but
all of such options will be exercised at or by the closing of this offering. No
further options will be issued under this plan.

NEW SHARE OPTION PLAN

Effective immediately prior to the closing of the offering we will adopt
our 1999 Share Option Plan. The option plan is intended to further our success
by increasing the proprietary interest of our key employees, directors and
consultants and to enhance our ability to attract and retain employees,
directors and consultants of outstanding ability. This is a summary of the
option plan. You should read the text of the option plan, which we filed as an
exhibit to the registration statement of which this prospectus is a part, for a
full statement of the terms and provisions of the option plan.

We may deliver up to 1,140,000 common shares, subject to adjustment if
particular capital changes affect the common shares, pursuant to incentive stock
options and non-qualified stock options granted to selected employees, directors
and consultants under the option plan. Such shares may be either authorized and
unissued shares or previously issued shares held as treasury shares.

An option permits, but does not require, the recipient to purchase up to a
particular number of common shares, by exercising the option, at a price fixed
when the option is granted, during a specified period of time following such
grant, if particular conditions are satisfied.

The compensation committee of our board of directors administers the option
plan. The compensation committee selects eligible employees, directors and
consultants to receive options, determines the price and number of common shares
covered by options and the terms under which options may be exercised, but in no
event later than 10 years from the date on which an option is granted, and sets
the other terms and conditions of options in accordance with the provisions of
the option plan. Recipients of options under the option plan may not transfer
their options unless they die or the compensation committee determines they may.

If we undergo a change in control, the compensation committee may provide
that the exercisability of outstanding options will be accelerated or adjust
outstanding options by substituting stock or other securities of any successor
or another party to such a transaction, or cash out such outstanding options, in
any such case, generally based on the consideration received by shareholders in
such a transaction.

Subject to particular limitations specified in the option plan, our board
of directors may amend or terminate the option plan and the compensation
committee may amend options outstanding under the option plan. The option plan
will terminate no later than 10 years from the closing of this offering;
however, any then-outstanding options will remain outstanding after such
termination of the plan, in accordance with their terms.

STOCKHOLDER LOANS

On November 27, 1996, Messrs. Cameron, Thompson, Russo, Pine, Franklin,
Brenner and some other of our officers and managers were granted loans by Statia
Terminals Group to purchase shares of its common stock and Series E Preferred
Stock. The loans totaled $1.5 million and were secured by pledges of such stock.
The loans bear interest at 6.49% annually and are due on the earlier of
(1) November 26, 2003 and (2) the sale of the pledged stock.

Upon the completion of this offering, Statia Terminals Group will replace
these loans with new loans. The interest rate with respect to these new loans
will be 5.17% annually. In addition, the maturity of these loans will be
extended until the earlier of (1) April 28, 2009 and (2) the sale of the pledged
stock.

EMPLOYMENT AGREEMENTS

Effective immediately prior to the closing of the offering, we will enter
into employment agreements with James G. Cameron, Thomas M. Thompson, Jr.,
Robert R. Russo, Jack R. Pine, John D. Franklin and James F. Brenner. These
agreements will provide for an annual base salary which is subject to review at
least annually by the board of directors or a committee thereof, increasing at
least at the growth rate of the consumer price index. The respective annual base
salaries currently in effect, and to continue in effect after the closing, are
$290,000 for Mr. Cameron; $245,000 for Mr. Thompson; $230,000 for Mr. Russo;
$150,000 for Mr. Pine; $150,000 for Mr. Franklin; and $150,000 for Mr. Brenner.
These agreements will also provide for an annual cash incentive bonus to be
awarded based on the difference between a target EBITDA and actual EBITDA. The
employment agreements will continue until March 31, 2002 and automatically renew
for an additional year on March 31 of every year unless either party gives
notice of non-renewal. Additional benefits include participation in an executive
life insurance plan for Mr. Cameron. In the event that we terminate any of these
employment agreements without substantial cause or the employee terminates for
good reason, as such terms are defined in each such employment agreement, the
employee shall be entitled to his current medical and dental benefits and his
current compensation. Such entitlements will last to the later of twelve months
or the remaining portion of the term of the relevant employment agreement. Such
entitlements will be payable in monthly installments for such period with the
addition of a pro rated portion of the employee's bonus compensation for the
year of termination. The bonus is only payable as and when ordinarily determined
for such year.

SPECIAL MANAGEMENT BONUS

In 1999 we accrued bonuses in the amount of approximately $1.9 million for
particular members of our management to partially reimburse these individuals
with respect to particular adverse tax consequences that will result from this
offering and other past compensation arrangements. These bonuses were
approximately: $577,000 to Mr. Cameron; $450,000 to Mr. Thompson; $396,000 to
Mr. Russo; $197,000 to Mr. Pine; $173,000 to Mr. Franklin and $155,000 to
Mr. Brenner.

SECURITY OWNERSHIP

The following table sets forth the number and percentage of shares of
currently outstanding common stock of Statia Terminals Group beneficially owned
as of December 31, 1998, and as adjusted to reflect the sale of the common
shares offered hereby and the issuance of the subordinated shares pursuant to
the restructuring, by (1) each person known to us to be a beneficial owner of
more than 5% of any class of our voting equity securities, (2) each of our
directors and executive officers, and (3) all of our directors and executive
officers as a group. The address of each owner is our principal office unless
otherwise indicated.

SHARES OF
COMMON STOCK
BENEFICIALLY OWNED
PRIOR TO THE OFFERING SUBORDINATED SHARES BENEFICIALLY
AND OWNED AFTER THE OFFERING AND
RESTRUCTURING RESTRUCTURING
------------------------ ---------------------------------
NUMBER OF NUMBER OF PERCENTAGES OF TOTAL
NAME(1) SHARES(3) PERCENTAGES SHARES(1) VOTING SHARES
- ------------------------------------------------------- --------- ----------- --------- --------------------

James G. Cameron....................................... 10,219(4) 21.69% 824,131(5) 7.23%
Thomas M. Thompson, Jr................................. 1,890 4.01% 152,423 1.34%
Robert R. Russo........................................ 1,662 3.53% 134,035 1.18%
Jack R. Pine........................................... 826 1.75% 66,614 0.58%
John D. Franklin....................................... 728 1.55% 58,711 0.52%
James F. Brenner....................................... 650 1.38% 52,420 0.46%
John K. Castle(2)...................................... 33,750 71.63% 2,721,832 23.88%
c/o Castle Harlan, Inc.
150 East 58th Street
New York, NY 10155
David B. Pittaway...................................... 200 0.42% 16,129 0.14%
Justin B. Wender....................................... 10 0.02% 806 0.01%
Admiral James L. Holloway III.......................... 150 0.32% 12,097 0.11%
Francis Jungers........................................ 200 0.42% 16,129 0.14%
Dr. Jonathan R. Spicehandler........................... 200 0.42% 16,129 0.14%
Ernest Voges........................................... 100 0.21% 8,065 0.07%
All Officers and Directors(2).......................... 42,580 90.3% 3,433,943 30.1%
Castle Harlan Partners II L.P., affiliates and Castle
Harlan employees(2).................................. 33,750 71.63% 2,721,832 23.88%
c/o Castle Harlan, Inc.
150 East 58th Street
New York, NY 10155
Statia Terminals Holdings N.V.......................... -- -- 3,800,000 33.3%

- ------------------
(1) All of the shareholders listed, other than Statia Terminals Holdings, are
shareholders of Statia Terminals Holdings and therefore may be deemed
beneficial owners of shares owned by Statia Terminals Holdings, and all of
the shares listed as being owned by such shareholders after the offering and
restructuring will be owned by Statia Terminals Holdings.
(2) Mr. Castle is the controlling shareholder of the general partner of the
general partner of Castle Harlan Partners II L.P. He may therefore be deemed
to be the beneficial owner of shares beneficially owned by Castle Harlan
Partners II L.P., its affiliates and Castle Harlan employees. Mr. Castle
disclaims beneficial ownership of the shares owned by Castle Harlan Partners
II L.P., its affiliates and Castle Harlan employees other than such shares
that represent his pro rata partnership interests in Castle Harlan Partners
II L.P. and its affiliates.
(3) Includes shares which will be acquired pursuant to the exercise of stock
options at the closing in the amount of 1,245 shares for Mr. Cameron; 990
shares for Mr. Thompson; 855 shares for Mr. Russo; 375 shares for Mr. Pine;
375 shares for Mr. Franklin; 340 shares for Mr. Brenner; 100 shares for
Adm. Holloway; 100 shares for Mr. Jungers; 100 shares for Dr. Spicehandler;
and 100 shares for Mr. Voges.
(4) Includes 7,795 shares owned by some of our employees who have granted to Mr.
Cameron a proxy to vote such shares. Mr. Cameron disclaims beneficial
ownership of these shares.
(5) Includes 628,643 shares owned by some of our employees based on the
assumption that these employees will grant to Mr. Cameron a proxy to vote
such shares. Mr. Cameron will disclaim beneficial ownership of these shares.

CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

SALE OF BROWNSVILLE TERMINAL

In July 1998, we sold our terminal in Brownsville, Texas. We used the net
proceeds from such sale to redeem 6,150 shares of Series D Preferred Stock owned
by Castle Harlan.

MANAGEMENT AGREEMENT

As part of the acquisition by Castle Harlan of outstanding capital stock of
certain of Statia Terminals Group's subsidiaries, Statia Terminals Group entered
into a management agreement with Castle Harlan providing for the payment,
subject to some conditions, of an annual management fee of $1,350,000 plus
expenses for advisory and strategic planning services. Under the indenture
relating to the mortgage notes,

o dividends from Statia Terminals International to Statia Terminals Group
permitting it to pay Castle Harlan's annual management fee, and

o a dividend of the net proceeds of the sale of the Brownsville facility

are excepted from the limitation on restricted payments so long as no default or
event of default exists. In January 1997 and November 1997, Statia Terminals
International declared and subsequently paid on each declaration date a dividend
of $1,350,000 on its common stock to Statia Terminals Group to enable it to pay
management fees to Castle Harlan, Inc. See note 12 to our consolidated financial
statements for information on preferred and common dividends paid prior to the
acquisition of capital stock by Castle Harlan. This management agreement will
terminate at the closing of this offering, except for continuing reimbursement
for ordinary and necessary expenses and a continuing indemnity for the period up
to the termination date.

CONSULTING AGREEMENT

Pursuant to an agreement between Castle Harlan and a consultant retained
for assistance with the structuring of the acquisition of capital stock by
Castle Harlan, we paid the consultant upon completion of the acquisition an
advisory fee (the consultant in turn paid a portion of such fee to particular
entities/persons which provided services to the consultant) of $2,500,000 in
cash and 1,500 shares of Series E Preferred Stock and 1,500 shares of common
stock of Statia Terminals Group. The consultant is also a party to an agreement
with Statia Terminals N.V. dated as of January 1, 1993 pursuant to which the
consultant renders particular advisory and consulting services to Statia
Terminals N.V. and is compensated therefor.

Four of Statia Terminals Group's directors, Admiral James L. Holloway III,
Francis Jungers, Jonathan R. Spicehandler, M.D. and Ernest Voges, have entered
into consulting agreements with Statia Terminals International for advisory and
consulting services related to investment and strategic planning, financial and
other matters. In consideration of services provided to Statia Terminals
International, each consultant receives a consulting fee of $6,250 per quarter
plus reimbursement of out-of-pocket expenses. Statia Terminals Group pays each
of the foregoing directors $1,000 per meeting of the board of directors
attended.

STOCKHOLDERS' AGREEMENTS

Statia Terminals Group and its current stockholders have entered into two
stockholders' agreements which will be terminated at the closing of this
offering.

At the closing of this offering Statia Terminals Group will enter into an
agreement with Statia Terminals Holdings, which will acquire all of the
subordinated shares upon the restructuring, pursuant to which Statia Terminals
Group will grant to Statia Terminals Holdings rights, including demand rights,
with respect to registration under the Securities Act of the subordinated shares
and the common shares issuable upon conversion thereof.

LOANS TO MANAGEMENT

On November 27, 1996, Statia Terminals Group granted individual officers
and managers, including Messrs. Cameron, Thompson, Russo, Pine, Brenner and
Franklin, non-recourse loans aggregating $1.5 million and secured by pledges of
restricted stock. The loans bear interest at 6.49% annually and are due on the
earlier of

o November 26, 2003,

o the sale of the pledged stock, and

o a "change in control," as defined in the loan agreement.

Upon the completion of the offering, Statia Terminals Group will reduce the
interest rate with respect to these loans to 5.17% annually. In addition, the
maturity of these loans will be extended until the earlier of

o April 28, 2009,

o the sale of the pledged stock, and

o a "change of control," as defined in the loan agreement.

BOARD OF DIRECTORS

Prior to the restructuring:

o Castle Harlan or its affiliates hold 13,850 shares of Series D
Preferred Stock, 33,750 shares of Series E Preferred Stock and
33,750 shares of the currently outstanding common stock; and

o individual directors and members of our management hold 4,724 shares
of Series E Preferred Stock and 4,724 shares of the currently
outstanding common stock and options to acquire an additional 6,145
shares of common stock.

Pursuant to the restructuring:

o Statia Terminal Group's Series D Preferred Stock and Series E
Preferred Stock will be redeemed at their liquidation preference;

o all shares of outstanding common stock consisting of 47,119 shares,
which includes an additional 6,145 shares of common stock to be
issued upon exercise of options at or by the closing, will be
reclassified as 471,190 subordinated shares;

o Statia Terminals Group will issue an additional 3,328,810
subordinated shares plus 38,000 incentive rights to the holders of
the remaining outstanding common stock; and

o all of the subordinated shares and incentive rights, and all of the
shares of Petroterminal de Panama, S.A. currently owned by Statia
Terminals Group, will be transferred at the closing to Statia
Terminals Holdings.

After the restructuring, some affiliates of Castle Harlan and some members
of our management will be directors of Statia Terminals Group. Some of the
actions taken by the board of directors may affect the amount of cash available
for distribution to holders of common and subordinated shares or accelerate the
conversion of subordinated shares. Decisions of the board of directors with
respect to the amount and timing of asset purchases and sales, cash
expenditures, borrowings, issuances of additional common shares and the
creation, reduction, cancellation or increase of reserves in any quarter will
affect whether, or the extent to which, there is sufficient available cash from
our operating surplus to meet the target quarterly distribution and additional
distributions levels on all shares in a given quarter or in subsequent quarters.

DESCRIPTION OF COMMON SHARES

This is a summary of the material provisions of the amended articles of
incorporation of Statia Terminals Group which will be put into effect at the
closing of the offering. It is qualified in its entirety by reference to the
provisions of the articles. We will make copies of the proposed form of the
articles available as described in "Available Information." The definitions of
particular terms used in the articles and in this summary are substantially the
same as those used elsewhere in this prospectus.

GENERAL

Statia Terminals Group was incorporated on September 4, 1996, in the
Netherlands Antilles as a public company with limited liability. It will have an
authorized capital of $300,000 consisting of the following classes and number of
shares:

o 20,000,000 common shares (referred to in the articles as Class A shares),
of which at the closing 7,600,000 will be issued and outstanding and
8,360,000 will be issued if the underwriters exercise their over-
allotment option in full;

o 7,800,000 subordinated shares (referred to in the articles as Class B
shares), of which at the closing 3,800,000 will be issued and
outstanding; and

o 2,200,000 incentive rights (referred to in the articles as Class C
shares), of which at the closing 38,000 will be issued and outstanding.

Each common and subordinated share and incentive right shall have a par value of
$0.01.

Subject to the limitations described under "--Issuance of Additional
Shares" below, Statia Terminals Group has the authority to issue additional
common shares or other equity securities. The consideration and terms and
conditions of such additional issuances are established by its board of
directors in its sole discretion and do not require the approval of any of the
shareholders. Statia Terminals Group has reserved for issuance the following
common shares:

o 12,400,000 common shares if the underwriters have not exercised their
over-allotment option;

o 11,640,000 common shares if the underwriters exercise their
over-allotment option in full;

o 8,600,000 common shares if all of the subordinated shares are converted
into common shares and the underwriters have not exercised their
over-allotment option; and

o 7,840,000 common shares if all of the subordinated shares are converted
into common shares and the underwriters have exercised their
over-allotment option in full.

In addition, Statia Terminals Group has reserved for issuance 4,000,000
subordinated shares, and 2,162,000 incentive rights.

DISTRIBUTIONS AND DISTRIBUTIONS UPON LIQUIDATION

For a description of the relative rights and preferences of the common
shares, the subordinated shares and the incentive rights in and to distributions
and distributions upon liquidations, see "Cash Distribution Policy."

VOTING RIGHTS

Holders of the common shares and holders of the subordinated shares, voting
together as one class, are entitled to one vote for each share on all matters to
be voted upon by shareholders, including the election of directors.

The board of directors shall be divided into 3 classes. Of the initial
board of directors after this offering, one class will serve for two years, one
class will serve for four years and one class will serve for six years.
Thereafter, each director will serve a term of six years. In the case of a
vacancy, upon the expiration of a director's term or otherwise, directors shall
be appointed by the holders of common and subordinated shares upon nomination by
the board of directors through a non-binding resolution. Holders of common
shares and holders of the subordinated shares do not have cumulative voting
rights in the election of directors. Election of directors is by absolute
majority of votes cast at a general meeting of shareholders, for which a quorum
consists of one-third of the aggregate outstanding common shares and
subordinated shares. Accordingly, holders of a

majority of the common shares and the subordinated shares, voting together as
one class, may elect all of the directors standing for election.

In general, resolutions must be passed by a majority of the common shares
and the subordinated shares, voting together as one class at a general meeting,
for which a quorum consists of the holders of one-third of the aggregate
outstanding common and subordinated shares. However, resolutions to amend Statia
Terminals Group's articles of incorporation, dissolve or liquidate it or dispose
of all or substantially all of its assets, require the approval of sixty-six and
two-thirds percent of the common and subordinated shares, voting together as one
class at a general meeting, for which a quorum consists of one-half of the
aggregate outstanding common and subordinated shares.

Shareholders meetings must be held in the Netherlands Antilles and may only
be called by the board of directors. One or more shareholders holding at least
10% of all outstanding shares may petition the board of directors to call a
meeting. If the board fails to call a meeting, such shareholders may petition a
Netherlands Antilles court to call a meeting.

ISSUANCE OF ADDITIONAL SHARES

Statia Terminals Group is authorized to issue up to 12,400,000 additional
common shares and 4,000,000 additional subordinated shares. The consideration
and terms and conditions of such additional issuances are established by its
board of directors in its sole discretion without the approval of any
shareholders, except as set forth in the next sentence. During the subordination
period, it may not:

o issue more than 4,000,000 additional common shares or

o issue any equity securities ranking senior to the common shares

without the prior approval of the holders of a majority of the outstanding
common shares, not including those common shares held by the holders of
incentive rights and their affiliates.

Even during the subordination period additional common shares may only be
issued if the issuance occurs:

o upon exercise of the underwriters' over-allotment option;

o upon conversion of the subordinated shares;

o pursuant to employee benefit plans;

o in the event of a combination or subdivision of common shares; or

o in connection with an acquisition or capital improvement that would have
resulted in an increase in adjusted operating surplus on a per common and
subordinated share basis pro forma for the preceding four-quarter period
or within 365 days of, and the net proceeds from such issuance are used
to repay debt incurred in connection with, the closing of such
acquisition or the completion of such a capital improvement.

The holders of common shares will not have preemptive rights to acquire
additional common shares or other securities that Statia Terminals Group may
issue.

Additional issuances of shares or other equity securities ranking junior to
the common shares may reduce the likelihood of, and the amount of, any
distributions above the target quarterly distribution.

TRANSFER AGENT AND REGISTRAR

The transfer agent and registrar with respect to the common shares is
Harris Trust and Savings Bank.

RESTRICTIONS ON OWNERSHIP AND TRANSFER

A non-United States corporation will be classified as a "controlled foreign
corporation" (a "CFC") for United States federal income tax purposes in any
taxable year of such corporation in which more than 50% of either (1) the total
combined voting power of all of its classes of stock entitled to vote or
(2) the total value of its stock, is owned or considered owned, on any day
during such taxable year, by United States persons who own or are considered to
own 10% or more of the total combined voting power of all of its classes of
stock entitled to vote ("Ten Percent Shareholders"). The CFC rules provide that
each Ten Percent Shareholder of a CFC is required to include in income each year
their pro rata share of the CFC's "Subpart F income" and investment of earnings
in U.S. property. Although we currently are a CFC, we expect that, as a result
of the offering, we will not be classified as a CFC.

Primarily to prevent becoming, or minimize the duration as, a CFC and to
prevent any ownership or transfer of the common shares which

may result in such a classification, any sale or other disposition of common
shares by a holder of common shares (a "Sale") or any other event relating to
the common shares, that would result in a Violation of the Ownership Limit is
null and void to the extent that such Sale or event causes a Violation of the
Ownership Limit. The restriction in the preceding sentence will not apply to,
and the definition of the term "Sale" does not include, the conversion of
subordinated shares into common shares, any subsequent transfer of the common
shares resulting from such conversion, any pledge, transfer by operation of law,
gift or inheritance of any interest in the common shares, as well as any sale or
other disposition, other than a Sale, of any beneficial, as opposed to legal,
interest in the common shares or the acquisition of any common shares pursuant
to the exercise of compensatory stock options or to any of our employee benefit
plans or any subsequent transfer of those common shares. For purposes of this
prospectus, the "Ownership Limit" is 9.9% of the total combined voting power of
all of Statia Terminals Group's classes of stock entitled to vote, and a
"Violation of the Ownership Limit" occurs when (1) any person would own or would
be considered to own by virtue of the attribution provisions of the CFC rules,
or (2) any person together with its "affiliates" and "associates" (as defined in
Rule 12b-2 under the U.S. Securities Exchange Act of 1934) and any group (within
the meaning of Section 13(d)(3) of such Securities Exchange Act) of which such
person is a part would own or would be considered to own by virtue of the
beneficial ownership provisions of Rule 13d-3 under such Securities Exchange
Act, in either case more than the Ownership Limit. In addition, any pledge,
transfer by operation of law, gift, or inheritance of any interest in the common
shares, as well as any sale or other disposition, other than a Sale, of any
beneficial, as opposed to legal, interest in the common shares (a "Gift") that
would result in a Violation of the Ownership Limit is prohibited to the extent
that such Gift causes a Violation of the Ownership Limit. The restriction in the
preceding sentence will not apply to, and the definition of the term "Gift" does
not include, the conversion of subordinated shares into common shares, any
subsequent transfer of the common shares resulting from such conversion or the
acquisition of any common shares pursuant to the exercise of compensatory stock
options or to any of our employee benefit plans or any subsequent transfer of
those common shares. In order to reflect these restrictions, Statia Terminals
Group's articles include provisions to such effect. These include, in summary:

o Any person who acquires direct, indirect, actual or constructive
ownership within the meaning of the CFC rules, of common shares that
violate the foregoing restrictions on transferability and ownership is
required to give notice immediately to us and to provide us with such
other information as we may request in order to determine the effect of
such Sale, Gift (a Sale and/or a Gift to be referred to as a "Transfer")
or event on our classification as a CFC or for any other related purpose;
the restrictions on transfer and ownership described throughout this
section may be waived by the board of directors with respect to a
Transfer or any other event described above.

o We will not recognize a holder of common shares as such until its common
shares have been issued in the name of such holder of common shares or,
in the case of a Transfer, until the common shares so transferred have
been registered in the name of such transferee; until such recognition,
any voting rights, dividend rights or distribution rights of such holder
or transferee will be suspended.

o In case of a prohibited Gift, the transferee will be required to dispose
of the number of common shares that exceeds the Ownership Limit ("Excess
Common Shares") to a person whose ownership of any such shares would not
violate the Ownership Limit (a "Qualified Person") within 15 days of the
date of the prohibited Gift. The acquiror or transferee of Excess Common
Shares pursuant to a prohibited Gift (the "Prohibited Transferee") will
be required to notify the company in writing of its compliance with the
requirement in the preceding sentence within 5 days of any such
compliance (a "Compliance Notice"). If the Prohibited Transferee fails to
provide a Compliance Notice to the company in any event within 20 days of
the date of the prohibited Gift, the company will be irrevocably and
exclusively authorized to sell, on behalf of the Prohibited Transferee,
the Excess Common Shares to a Qualified Person at the fair market value
of those

shares and to take all the necessary steps to effect that sale. In the
event of a Gift, the acquiror or transferee will by acceptance or receipt
of the relevant share certificate(s) representing any Excess Common
Shares be deemed to have agreed to the requirements set forth above.

The restrictions on ownership and transfer described above are not the only
restrictions on the common shares. We recommend that you examine Statia
Terminals Group's articles for a complete description of all the restrictions on
ownership and transfer of the common shares.

All certificates representing common shares will bear a legend referring to
the restrictions described above, as follows:

THE INTERESTS REPRESENTED BY THIS CERTIFICATE ARE ISSUED, ACCEPTED AND HELD
SUBJECT TO THE TERMS OF THE ARTICLES OF STATIA TERMINALS GROUP, AS THE SAME MAY
BE AMENDED FROM TIME TO TIME (THE "ARTICLES") AND THIS CERTIFICATE. A COPY OF
THE ARTICLES IS AVAILABLE AT THE PRINCIPAL OFFICE OF STATIA TERMINALS GROUP.
OWNERSHIP, SALE, TRANSFER, MORTGAGE, PLEDGE, HYPOTHECATION OR OTHER ENCUMBRANCE
OR DISPOSITION OF THIS CERTIFICATE AND THE INTERESTS REPRESENTED HEREBY ARE
SUBJECT TO RESTRICTIONS SET FORTH IN THE ARTICLES AND THIS CERTIFICATE, AND THE
HOLDER HEREOF, BY THE ACCEPTANCE OF THIS CERTIFICATE, ACKNOWLEDGES NOTICE OF ALL
THE PROVISIONS IN THE ARTICLES AND THIS CERTIFICATE AND AGREES TO BE BOUND
THERETO. OWNERSHIP AND ANY TRANSFER OF THIS CERTIFICATE OR THE SHARES
REPRESENTED HEREBY IN VIOLATION OF THE TERMS OF THE ARTICLES AND THIS
CERTIFICATE SHALL BE PROHIBITED, AND SHALL BE NULL AND VOID AND OF NO FORCE AND
EFFECT TO THE EXTENT, AND INSOFAR AS SET FORTH IN THE ARTICLES AND THIS
CERTIFICATE.

Pursuant to a Netherlands Antilles ordinance, a person who directly or
indirectly acquires shares representing 5% or more of all of our voting
securities must notify us immediately of such acquisition. The board of
directors must publicly announce such notice and distribute it to all
shareholders. Failure to comply with the provisions of this ordinance may result
in the limitation of such shares' voting rights to 5% of all voting securities
and may lead to civil and/or criminal penalties.

DESCRIPTION OF THE SUBORDINATED SHARES

The subordinated shares are a separate class of shares of Statia Terminals
Group, and the rights of holders of such subordinated shares to participate in
dividends and distributions on liquidation differ from, and are subordinated to,
the rights of the holders of common shares. For any given quarter, any available
cash will first be distributed to the holders of common shares, and then will be
distributed to the holders of subordinated shares depending upon the amount of
available cash for the quarter, the amount of common share arrearages, if any,
and the rights of the holders of incentive rights. Distribution of the first
$6.8 million on the subordinated shares will be deferred as described under
"Cash Distribution Policy--Deferral of Distributions on Subordinated Shares".

CONVERSION OF SUBORDINATED SHARES

The subordination period will generally extend from the closing of this
offering until the tests set forth below have been met for any quarter ending on
or after June 30, 2004 in respect of which:

o distributions of available cash from operating surplus on the common and
subordinated shares with respect to each of the three consecutive
non-overlapping four-quarter periods immediately preceding the date of
determination equaled or exceeded the sum of the target quarterly
distribution on all of the outstanding common and subordinated shares
during such periods;

o the adjusted operating surplus generated during each of the three
consecutive non-overlapping four-quarter periods immediately preceding
the date of determination equaled or exceeded the sum of the target
quarterly distribution on all of the common and subordinated shares that
were outstanding on a fully diluted basis; and

o there are no outstanding common share arrearages.

Prior to the end of the subordination period and to the extent the tests
for conversion described below are satisfied, a portion of the subordinated
shares may be eligible to convert into common shares prior to June 30, 2004.
Subordinated shares will convert into common shares on a one-for-one basis on
the first day after the record date established for the distribution in respect
of any quarter ending on or after (a) June 30, 2002 with respect to one-quarter
of the subordinated shares (950,000 subordinated shares) and (b) June 30, 2003
with respect to one-quarter of the subordinated shares (950,000 subordinated
shares), in respect of which:

o there are no outstanding common share arrearages.

The early conversion of the second one-quarter of subordinated shares may not
occur until at least one year following the early conversion of the first one-
quarter of subordinated shares.

DISTRIBUTIONS UPON LIQUIDATION

If Statia Terminals Group liquidates during the subordination period, under
some circumstances holders of outstanding common shares will be entitled to
receive more per share in liquidating distributions than holders of outstanding
subordinated shares. Following conversion of the subordinated shares into common
shares, all common and subordinated shares will be treated the same upon
liquidation of Statia Terminals Group.

SHARES ELIGIBLE FOR FUTURE SALE

Upon completion of this offering and conversion of the outstanding
subordinated shares into common shares, there will be 11,400,000 common shares
outstanding, or 12,160,000 common shares if the underwriters' over-allotment
option is exercised in full, in each case assuming no exercise of options or
warrants after January 1, 1999. The 7,600,000 common shares being sold in this
offering, or 8,360,000 common shares if the underwriters' over-allotment option
is exercised in full, will be freely tradeable in the U.S. without restriction
under the U.S. Securities Act of 1933, unless such common shares are acquired by
our "affiliates" as defined in Rule 144 under the Securities Act. The 3,800,000
common shares to be outstanding upon conversion of the subordinated shares will
be "restricted securities" as defined in Rule 144 and Rule 701 under the
Securities Act and may not be sold unless they are either registered under the
Securities Act or sold pursuant to an exemption from registration, such as the
exemption provided by Rule 144.

In general, under Rule 144 as currently in effect:

o If one year has elapsed since the later of the date of the acquisition of
the restricted common shares (or the subordinated shares from which they
were converted) from either Statia Terminals Group or any of its
affiliates, the acquiror or subsequent holder thereof may sell, within
any three-month period commencing 90 days after the date of this
prospectus, a number of common shares that does not exceed

(a) the greater of one percent of the then outstanding common shares
(approximately 7,600 common shares immediately after this offering),
or

(b) the average weekly trading volume of the common shares on the Nasdaq
National Market during the four calendar weeks preceding the date on
which notice of the proposed sale is filed with the commission.

o If two years have elapsed since the later of the date of the acquisition
of the restricted common shares, or the subordinated shares from which
they were converted, from Statia Terminals Group or any of its
affiliates, a person who is not deemed to have been an affiliate of
Statia Terminals Group, at any time for 90 days preceding a sale would be
entitled to sell such common shares under Rule 144 without regard to the
volume limitations, manner of sale provisions or notice requirements.

The one-year and two-year periods may in some circumstances include the
holding period of a prior owner. The one-year and two-year holding periods
described above do not begin until the full purchase price or other
consideration is paid by the person acquiring the restricted common shares (or
subordinated shares) from Statia Terminals Group, or one of its affiliates.
Sales under Rule 144 are also subject to particular manner of sale provisions,
notice requirements and the availability of current public information about
Statia Terminals Group.

Pursuant to an agreement between Statia Terminals Group and Statia
Terminals Holdings N.V., Statia Terminals Holdings N.V. has the right to require
Statia Terminals Group to use its best efforts to register up to all of the
subordinated shares and all common shares issuable upon conversion thereof under
the Securities Act. Statia Terminals Holdings N.V. also has some "piggyback"
registration rights to compel the inclusion of such subordinated and common
shares in registration statements filed by Statia Terminals Group under the
Securities Act.

Prior to this offering, there has been no public market for the common
shares. Trading of the common shares on the Nasdaq National Market is expected
to commence immediately following completion of this offering. No prediction can
be made as to the effect, if any, that future sales of common shares or the
availability of common shares for future sale, will have on the market price
prevailing from time to time. Sales of substantial amounts of common shares,
including common shares issued upon conversion of the subordinated shares, or
the perception that such sales could occur, could adversely affect prevailing
market prices of the common shares.

TAXATION

NETHERLANDS ANTILLES TAXATION

In the opinion of PricewaterhouseCoopers, special Netherlands Antilles tax
advisor to Statia Terminals Group the following is a description of the
principal Netherlands Antilles tax consequences relating to the ownership and
disposition of the common shares. Under the laws of the Netherlands Antilles as
currently in effect, a holder of common shares who is not a resident or deemed a
resident of, and during the taxable year has not engaged in trade or business
through a permanent establishment, permanent representative or agent in, the
Netherlands Antilles will not be subject to Netherlands Antilles income tax on
distributions made with respect to the common shares or on gains realized during
that year on sale or disposal of such shares; the Netherlands Antilles do not
impose a withholding tax on distributions made by Statia Terminals Group. There
are no gift or inheritance taxes levied by the Netherlands Antilles when at the
time of such gift or at the time of death, the relevant holder of common shares
was not domiciled or deemed domiciled in the Netherlands Antilles. A person is
not deemed a resident or deemed domiciled in the Netherlands Antilles merely on
the basis of being a holder of common shares.

U.S. FEDERAL INCOME TAXATION

In the opinion of White & Case LLP, special U.S. tax counsel to Statia
Terminals Group, the following is a description of the principal U.S. federal
income tax consequences relating to the ownership and disposition of the common
shares. This description is based on (1) the Internal Revenue Code of 1986, as
amended (the "Code"), (2) income tax regulations, proposed and final, issued
under the Code and (3) administrative and judicial interpretations of the Code
and regulations, each as in effect and available on the date of this prospectus.

These income tax laws, regulations, and interpretations, however, may
change at any time, and any change could be retroactive to the date of this
prospectus. These income tax laws and regulations are also subject to various
interpretations, and the Internal Revenue Service or the courts could later
disagree with the explanations or conclusions contained in this description.

This description deals only with the U.S. federal income tax considerations
of holders that are initial purchasers of the common shares and that will hold
common shares as capital assets, as defined in the Code. We do not, however,
address all of the tax consequences that may be relevant to a holder of common
shares.

A "United States Holder" is a beneficial owner of common shares, who for
U.S. federal income tax purposes is:

o a citizen or resident of the U.S.;

o a partnership or corporation created or organized in or under the laws of
the U.S. or any state thereof, including the District of Columbia;

o an estate if its income is subject to U.S. federal income taxation
regardless of its source; or

o a trust if such trust validly has elected to be treated as a United
States person for U.S. federal income tax purposes or if (1) a U.S. court
can exercise primary supervision over its administration, and (2) one or
more United States persons have the authority to control all of its
substantial decisions.

A "Non-United States Holder" is a beneficial owner of common shares other
than a United States Holder.

We also do not address, except as stated below, any of the tax consequences
to (1) holders of common shares that may be subject to special tax treatment
such as financial institutions, real estate investment trusts, tax-exempt
organizations, regulated investment companies, insurance companies, and brokers
and dealers or traders in securities or currencies, (2) persons who acquired
common shares pursuant to an exercise of employee stock options or rights or
otherwise as compensation, (3) persons whose functional currency is not the U.S.
dollar, (4) persons that

hold or will hold common shares as part of a position in a straddle or as part
of a hedging or conversion transaction and (5) holders of common shares that
own, or are deemed to own, 10% or more, by voting power or value, of the
outstanding stock of Statia Terminals Group.

Further, we do not address any state, local or foreign tax consequences
relating to the ownership and disposition of the common shares.

PROSPECTIVE INVESTORS ARE ADVISED TO CONSULT WITH THEIR OWN TAX ADVISORS
REGARDING THE U.S. FEDERAL INCOME TAX CONSEQUENCES RELATING TO THE OWNERSHIP AND
DISPOSITION OF THE COMMON SHARES AS WELL AS THE EFFECT OF ANY STATE, LOCAL OR
FOREIGN TAX LAWS.

UNITED STATES HOLDERS

DISTRIBUTIONS

If you are a United States Holder, the gross amount of any distribution to
you by Statia Terminals Group with respect to common shares will be includible
in your income as dividend income to the extent such distribution is paid out of
the current or accumulated earnings and profits of Statia Terminals Group as
determined under U.S. federal income tax principles. Such distribution will not
be eligible for the dividends received deduction generally allowed to corporate
United States Holders. To the extent that the amount of any distribution by
Statia Terminals Group exceeds its current and accumulated earnings and profits
as determined under U.S. federal income tax principles, it will be treated first
as a tax-free return of your adjusted tax basis in the common shares and
thereafter as capital gain.

CONSTRUCTIVE DISTRIBUTIONS

In the event of any combination or subdivision of the common shares,
whether effected by a distribution payable in common shares or otherwise, but
not by reason of the issuance of additional common shares for cash or property,
the target quarterly distribution, the additional distribution levels, the
unrecovered initial price, the amount of common shares issuable upon conversion
of the subordinated shares, and some other amounts are all subject to
adjustment. Although Statia Terminals Group expects that any such adjustments
will be made to avoid its application, Section 305 of the Code and the income
tax regulations thereunder may treat a United States Holder as having received a
constructive distribution from Statia Terminals Group, resulting in dividend
income to the extent of Statia Terminals Group's current and accumulated
earnings and profits, but only to the extent that any such adjustments increase
the United States Holder's proportionate interest in the assets or earnings and
profits of Statia Terminals Group.

TAXES WITHHELD ON DISTRIBUTIONS

Distributions received by you with respect to common shares will be treated
as foreign source income, which may be relevant in calculating your foreign tax
credit limitation. Subject to certain conditions and limitations, any
Netherlands Antilles' tax withheld on distributions may be deducted from your
taxable income or credited against your U.S. federal income tax liability. The
limitation on foreign taxes eligible for credit is calculated separately with
respect to specific classes of income. For this purpose, distributions by Statia
Terminals Group generally will constitute passive income or, in the case of some
United States Holders, financial services income.

SALE OR EXCHANGE OF COMMON SHARES

If you are a United States Holder, generally you will recognize gain or
loss on the sale or exchange of common shares equal to the difference between
the amount realized on such sale or exchange and your adjusted tax basis in the
common shares. Your adjusted tax basis in the common shares will equal the
amount you paid for the common shares reduced by the amount of any distributions
you received on such common shares that are treated as a tax-free return of your
basis. Such gain or loss will be capital gain or loss. If you are a
non-corporate United States Holder, generally the maximum U.S. federal income
tax rate applicable to such gain will be lower than the maximum U.S. federal
income tax rate applicable to ordinary income if your holding period for such
common shares exceeds one year. For example, generally the maximum rate
applicable to ordinary income in 1999 for a United States Holder who is an
individual would be 39.6%, whereas, generally, net capital gains of such a
holder from the disposition of common shares held for more than one year at the
time of disposition would be subject to a maximum rate of 20%. Any gain
recognized by you generally will be treated as U.S. source income for U.S.
foreign tax credit purposes. The

deductibility of capital losses is subject to limitations.

SPECIAL TAX RULES

PASSIVE FOREIGN INVESTMENT
COMPANY CONSIDERATIONS

A non-U.S. corporation will be classified as a passive foreign investment
company (a "PFIC") for U.S. federal income tax purposes in any taxable year in
which, after applying look-through rules, either (1) at least 75% of its gross
income is passive income, or (2) on average at least 50% of the gross value of
its assets is attributable to assets that produce passive income or are held for
the production of passive income. Passive income for this purpose generally
includes dividends, interest, royalties, rents and gains from commodities and
securities transactions.

Based on its estimated gross income, the average value of its gross assets
and the nature of its business, Statia Terminals Group believes that it will not
be classified as a PFIC for its current taxable year. Statia Terminals Group's
status in future years will depend on its assets and activities in those years.
Statia Terminals Group has no reason to believe that its assets or activities
will change in a manner that would cause it to be classified as a PFIC. If
Statia Terminals Group were a PFIC, a United States Holder of common shares
generally would be subject to imputed interest charges and other disadvantageous
tax treatment with respect to any gain from the sale or exchange of, and some
distributions with respect to, the common shares.

CONTROLLED FOREIGN CORPORATION
CONSIDERATIONS

A non-U.S. corporation will be classified as a controlled foreign
corporation (a "CFC") for U.S. federal income tax purposes in any taxable year
of such corporation in which more than 50% of either (1) the total combined
voting power of all classes of stock of such corporation entitled to vote, or
(2) the total value of the stock of such corporation is owned or considered
owned, on any day during such taxable year, by United States persons who own or
are considered to own 10% or more of the total combined voting power of all
classes of stock entitled to vote of such corporation ("Ten Percent
Shareholders"). The CFC rules provide that, even if the CFC has made no
distributions to its shareholders, each Ten Percent Shareholder of a CFC is
required to include in income each year such Ten Percent Shareholder's pro rata
share of the CFC's Subpart F income and investment of earnings in U.S. property.
Although Statia Terminals Group currently is a CFC, Statia Terminals Group
expects that, as a result of the offering, it will not be classified as a CFC.
In addition, Statia Terminals Group's articles contain provisions primarily
adopted to prevent becoming, or minimize the duration as, a CFC and to prevent
any ownership or transfer of the common shares which may result in such
classification.

NON-UNITED STATES HOLDERS

DISTRIBUTIONS

If you are a Non-United States Holder of common shares, generally you will
not be subject to U.S. federal income or withholding tax on distributions
received on common shares, unless such income is effectively connected with the
conduct by you of a trade or business in the U.S.

SALE OR EXCHANGE OF COMMON SHARES

If you are a Non-United States Holder of common shares, generally you will
not be subject to U.S. federal income or withholding tax on any gain realized on
the sale or exchange of such shares unless (1) such gain is effectively
connected with the conduct by you of a trade or business in the U.S. or (2) in
the case of any gain realized by an individual, you are present in the U.S. for
183 days or more in the taxable year of such sale or exchange and some other
conditions are met.

BACKUP WITHHOLDING TAX AND INFORMATION REPORTING REQUIREMENTS

U.S. backup withholding tax and information reporting requirements
generally apply to some payments to particular non-corporate holders of stock.
Information reporting generally will apply to payments of distributions on, and
to proceeds from the sale or redemption of, common shares by a payor within the
U.S. to a holder of common shares other than an exempt recipient. Exempt
recipients include corporations, payees that are Non-United States Holders that
provide an appropriate certification and some other persons. A payor within the
U.S. will be required to withhold 31% of any payments of the proceeds from the
sale or redemption of common shares within the U.S. to

you, unless you are an exempt recipient, if you fail to furnish your correct
taxpayer identification number or otherwise fail to comply with such backup
withholding tax requirements.

Income tax regulations issued on October 6, 1997, and amended on
December 30, 1998, would modify some of the rules discussed above generally with
respect to payments on common shares made after December 31, 1999. In
particular, a payor within the U.S. will be required to withhold 31% of any
payments of distributions on, or proceeds from the sale of, common shares within
the U.S. to you, unless you are an exempt recipient, if you fail to furnish your
correct taxpayer identification number or otherwise fail to comply with, or
establish an exemption from, such backup withholding tax requirements. In the
case of such payments by a payor within the U.S. to a foreign partnership, other
than payments to a foreign partnership that qualifies as a withholding foreign
partnership within the meaning of such income tax regulations and payments to a
foreign partnership that are effectively connected with the conduct of a trade
or business in the U.S., the partners of such partnership will be required to
provide the certification discussed above in order to establish an exemption
from backup withholding tax and information reporting requirements. Moreover, a
payor may rely on a certification provided by a Non-United States Holder only if
such payor does not have actual knowledge or a reason to know that any
information or certification stated in such certificate is unreliable.

THE ABOVE DESCRIPTION IS NOT INTENDED TO CONSTITUTE A COMPLETE ANALYSIS OF
ALL TAX CONSEQUENCES RELATING TO THE OWNERSHIP AND DISPOSITION OF COMMON SHARES.
PROSPECTIVE PURCHASERS OF COMMON SHARES ARE URGED TO CONSULT THEIR OWN TAX
ADVISORS REGARDING THE APPLICATION OF THE U.S. FEDERAL INCOME TAX LAWS TO THEIR
PARTICULAR SITUATIONS, AS WELL AS ANY TAX CONSEQUENCES THAT MAY ARISE UNDER THE
LAWS OF ANY FOREIGN, STATE, LOCAL OR OTHER TAXING JURISDICTION.

PLAN OF DISTRIBUTION

Upon the terms and subject to the conditions stated in the underwriting
agreement dated April 22, 1999, Statia Terminals Group has agreed to sell to
each of the underwriters named below, and each of the underwriters has severally
agreed to purchase from Statia Terminals Group, the number of common shares set
forth opposite its name below:

Number of
Underwriter Common Shares
- ------------------------------------- -------------

Bear, Stearns & Co. Inc. 2,280,000
Morgan Stanley & Co. Incorporated 2,280,000
Prudential Securities Incorporated 1,520,000
Dain Rauscher Wessels
a division of Dain Rauscher
Incorporated 760,000
Doft & Co., Inc. 76,000
First Union Capital Markets Corp. 76,000
Howard, Weil, Labouisse, Friedrichs
Incorporated 76,000
Jefferies & Company, Inc. 76,000
Johnson Rice & Company L.L.C. 76,000
Edward D. Jones & Co., L.P. 76,000
Morgan Keegan & Company, Inc. 76,000
Petrie Parkman & Co. 76,000
Raymond James & Associates, Inc. 76,000
Sanders Morris Mundy Inc. 76,000
---------
Total 7,600,000
---------
---------

The underwriting agreement provides that the obligations of the several
underwriters to pay for and accept delivery of the common shares offered hereby
are subject to approval of certain legal matters by their counsel and to some
other conditions. The underwriters are obligated to take and pay for all common
shares offered hereby, other than those covered by the underwriters' over-
allotment option described below, if any such common shares are taken.

The following table shows the per share and total underwriting discounts
and commissions to be paid by us to the underwriters. Such amounts are shown
assuming both no exercise and full exercise of the underwriters' option to
purchase additional shares

PAID BY STATIA
TERMINALS GROUP
-----------------
NO EXERCISE FULL EXERCISE
----------------- -------------

Per common
share........... $ 1.30 $ 1.30
Total............. $ 9,880,000 $10,868,000

The underwriters propose to offer part of the common shares directly to the
public at the offering price set forth on the cover page of this prospectus and
part of such common shares to particular dealers at such price less a concession
not in excess of $0.83 per common share. The underwriters may allow, and such
dealers may reallow, a concession not in excess of $0.10 per common share to
other underwriters or to some other dealers. After the initial offering of the
common shares to the public, the offering price and other selling terms may from
time to time be varied by the underwriters. The underwriters have informed us
that they do not intend to confirm sales to accounts over which they exercise
discretionary authority.

Statia Terminals Group has granted to the underwriters an option,
exercisable for 30 days from the date of this prospectus, to purchase up to
760,000 additional common shares at the initial public offering price set forth
on the cover page of this prospectus, minus the underwriting discounts and
commissions. The underwriters may exercise such option solely for the purpose of
covering over-allotments, if any, made in connection with the offering of the
common shares offered hereby. To the extent such option is exercised, each
underwriter will be obligated, subject to conditions, to purchase approximately
the same percentage of such additional common shares as the number of common
shares set forth opposite such underwriter's name in the preceding table bears
to the total number of common shares listed in such table.

In addition, some persons participating in this offering may engage in
transactions that stabilize, maintain or otherwise affect the price of the
common shares during and after this offering. For instance, the underwriters may
over-allot or otherwise create a short position in the common shares for their
own account by selling more common shares than have been sold to them by Statia
Terminals Group. The underwriters may then

elect to cover any such short position by purchasing common shares in the open
market or by exercising the over-allotment options granted to the underwriters.
In addition, such persons may stabilize or maintain the price of the common
shares by bidding for or purchasing common shares in the open market and may
impose penalty bids, under which selling concessions allowed to syndicate
members or other broker-dealers participating in this offering are reclaimed if
shares previously distributed in this offering are repurchased in connection
with stabilization transactions or otherwise. The effect of these transactions
may be to stabilize or maintain the market price of the common shares at a level
above that which might otherwise prevail in the open market. The imposition of a
penalty bid may also affect the price of the common shares to the extent that it
discourages resales thereof. No representation is made as to the magnitude or
effect of any such stabilization or other transactions. Such transactions, if
commenced, may be discontinued at any time.

Statia Terminals Group and its affiliates and the officers and directors of
Statia Terminals Group and its affiliates have agreed as follows:

o they will not, pursuant to an effective registration statement under the
Securities Act, offer, sell, contract to sell or otherwise dispose of any
common or subordinated shares, any securities that are convertible into,
or exercisable or exchangeable for, or that represent the right to
receive, common or subordinated shares or any securities that are senior
to or pari passu with common shares; or

o Statia Terminals Group will not register any subordinated shares under
the Securities Act, purchase any subordinated shares or grant any options
or warrants to purchase common shares

in each case for a period of 180 days after the date of this prospectus, without
the prior written consent of Bear, Stearns & Co. Inc. and Morgan Stanley & Co.
Incorporated, except for issuances of common shares in connection with some
acquisitions or capital improvements that are accretive on a per common or
subordinated share basis or pursuant to employee benefit plans.

Prior to this offering, there has been no public market for the common
shares of Statia Terminals Group. Consequently, the initial public offering
price has been determined by negotiations between Statia Terminals Group and the
underwriters. Among the factors considered in determining the initial public
offering price were the history of and prospects for our business and the
industry in which we compete, an assessment of our management and the present
state of our development, our past and present revenues, earnings and cash
flows, the prospects for growth of our revenues, earnings and cash flows, the
current state of the U.S. economy and the current level of economic activity in
the industry in which we compete and in related or comparable industries, and
currently prevailing conditions in the securities markets, including current
market valuations of publicly traded companies which are comparable to us.

We estimate that the total fees and expenses of this offering, excluding
underwriting discounts and commissions, will be approximately $5.1 million. This
amount includes a financial advisory fee of $1.5 million that we have agreed to
pay to Bear, Stearns & Co. Inc. in connection with the restructuring described
herein. In addition, some of the underwriters may from time-to-time perform
investment banking and other financial services for Statia Terminals Group and
its affiliates for which they may receive advisory or transaction fees, as
applicable, plus out-of-pocket expenses, of the nature and in amounts customary
in the industry for such services.

Statia Terminals Group has agreed to indemnify the underwriters against
some civil liabilities, including liabilities under the Securities Act.

EXPERTS

The consolidated financial statements of Statia Terminals Group and its
subsidiaries as of December 31, 1997 and 1998 and for the period from
January 1, 1996 through November 27, 1996, the period from inception through
December 31, 1996 and the years ended December 31, 1997 and 1998, included in
this prospectus have been audited by Arthur Andersen LLP, independent certified
public accountants, as indicated in their reports with respect thereto, and are
included herein in reliance upon the authority of said firm as experts in giving
said reports.

The opinion set forth under "Taxation--Netherlands Antilles Taxation"
referred to in this prospectus and elsewhere in the registration statement has
been rendered by PricewaterhouseCoopers (Netherlands Antilles), independent
public accountants, and has been referred to herein in reliance upon the
authority of such firm as experts in giving said opinion.

LEGAL MATTERS

The validity of the issuance of the common shares offered hereby will be
passed upon for Statia Terminals Group by Smeets Thesseling van Bokhorst Spigt,
Curacao, Netherlands Antilles, with respect to Netherlands Antilles law.

Some legal matters in connection with this offering will be passed upon for
Statia Terminals Group by White & Case LLP, New York, New York. A partner at
White & Case LLP, through his interest in a holding company, beneficially owns
93.75 shares of Statia Terminals Group's currently outstanding common stock and
93.75 shares of its currently outstanding Series E Preferred Stock.

Some legal matters in connection with this offering will be passed upon for
the underwriters by Andrews & Kurth L.L.P., New York, New York.

ENFORCEABILITY OF CERTAIN
CIVIL LIABILITIES

Our Netherlands Antilles counsel, Smeets Thesseling van Bokhorst Spigt,
Curacao, has advised us as to risks relating to the enforceability of particular
civil liabilities under the U.S. federal securities laws and related foreign
judgments by courts of the Netherlands Antilles. Our Canadian counsel, Stewart
McKelvey Stirling Scales, has advised us as to risks relating to the
enforceability of such civil liabilities and foreign judgments by courts of the
Province of Nova Scotia. For a detailed discussion of these risks, see "Risk
Factors--You may not be able to sue us effectively in the Netherlands Antilles
or Canada."

Statia Terminals Group has appointed CT Corporation System, 1633 Broadway,
New York 10019 as its agent for service of process in the United States.

AVAILABLE INFORMATION

Statia Terminals Group has filed with the Securities and Exchange
Commission a registration statement on Form S-1 (together with all amendments,
exhibits, schedules and supplements thereto, the "registration statement") under
the Securities Act and the rules and regulations thereunder, for the
registration of the common shares offered through this prospectus. This
prospectus, which forms a part of the registration statement, does not contain
all the information set forth in the registration statement, certain parts of
which have been omitted as permitted by the commission rules and regulations.
Statements made in this prospectus as to the contents of any contract or other
document referred to herein are not necessarily complete. Where such contract or
other document is an exhibit to the registration statement, each such statement
is qualified in all respects by the provisions of such exhibit, to which
reference is hereby made.

The registration statement may be inspected and copied at the public
reference facilities maintained by the commission at Room 1024, 450 Fifth
Street, N.W., Judiciary Plaza, Washington, D.C. 20549 and at the following
regional offices of the commission: Northwestern Atrium Center, 500 West Madison
Street, Suite 1400, Chicago, Illinois 60661; and 7 World Trade Center, 13th
Floor, New York, New York 10048. Copies of such material can be obtained by mail
from the Public Reference Section of the commission at 450 Fifth Street, N.W.,
Judiciary Plaza, Washington, D.C. 20549 at prescribed rates. Electronic
registration statements filed through the Electronic Data Gathering Analysis and
Retrieval system are publicly available through the commission's web site at
http://www.sec.gov. All amendments thereto and subsequent periodic reports
required to be filed under the Securities Exchange Act of 1934, as amended, have
been and will be filed through EDGAR.

Although Statia Terminals Group has not been, prior to this offering,
subject to the periodic reporting and other informational requirements of the
Exchange Act, two of Statia Terminals Group's subsidiaries, Statia Terminals
International and Statia Terminals Canada jointly file (as co-issuers of the
mortgage notes) reports and other information with the commission in accordance
therewith. Such reports and information may be inspected and copied at the
public reference facilities referred to above or obtained from the address or
web sites specified above.

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APPENDIX A
GLOSSARY OF OFFERING TERMS

Acquisition.......................... Any transaction in which we acquire (through an asset acquisition, merger,
stock acquisition or other form of investment) control over all or a
portion of the assets, properties or business of another person for the
purpose of increasing our operating capacity or revenues over our
operating capacity or revenues existing immediately prior to such
transaction.

Adjusted operating surplus........... For any period, operating surplus generated during that period as adjusted
to:

(a) decrease operating surplus by:

(1) any net increase in working capital borrowings during that period, and

(2) any net reduction in cash reserves for operating expenditures during
that period not relating to an operating expenditure made during that
period; and

(b) increase operating surplus by;

(1) any net decrease in working capital borrowings during that period, and

(2) any net increase in cash reserves for operating expenditures during
that period required by any debt instrument for the repayment of
principal, interest or premium.

Adjusted operating surplus does not include that portion of operating
surplus included in clause (a)(1) of the definition of operating surplus.

Available cash....................... For any quarter prior to liquidation, available cash means:

(a) the sum of:

(1) all of our cash and cash equivalents on hand at the end of that
quarter, and

(2) all of our additional cash and cash equivalents on hand on the date of
determination of available cash for that quarter resulting from
working capital borrowings made after the end of that quarter;
less

(b) the amount of any cash reserves necessary or appropriate in the
reasonable discretion of our board of directors to:

(1) provide for the proper conduct of our business, including reserves for
future capital expenditures and for our anticipated future credit
needs, after that quarter,

(2) provide funds for target quarterly distributions and cumulative common
share arrearages for any one or more of the next four quarters, or

(3) comply with applicable law or any loan agreement, security agreement,
mortgage, debt instrument or other agreement or obligation to which we
are a party or by which we are bound or our assets are subject.

A-1

Our board of directors may not establish cash reserves pursuant to (2)
above if the effect of those reserves would be that we are unable to
distribute the target quarterly distribution on all common shares, plus
any cumulative common share arrearage on all common shares for that
quarter; and disbursements made by us or cash reserves established,
increased or reduced after the end of that quarter but on or before the
date of determination of available cash for that quarter shall be deemed
to have been made, established, increased or reduced for purposes of
determining available cash within that quarter if our board of directors
so determines. However, "available cash" for the quarter in which our
liquidation occurs and any quarter after that will equal zero.

Capital improvements................. Additions or improvements to the capital assets owned by us or the
acquisition of existing, or the construction of new, capital assets
(including terminaling and storage facilities and related assets), in each
case made to increase our operating capacity or revenues existing
immediately prior to that addition, improvement, acquisition or
construction.

Interim capital transactions......... The following transactions, if they occur prior to liquidation, are
interim capital transactions:

o our borrowings or refinancings of indebtedness and sales of debt
securities (other than working capital borrowings and other than for
items purchased on open account in the ordinary course of business);

o sales of equity interests by us, other than the common shares sold to
the underwriters of the initial public offering of the common shares for
the exercise of their over-allotment option; and

o sales or other voluntary or involuntary dispositions of our assets,
except for sales or other dispositions of:

(a) inventory in the ordinary course of business,

(b) accounts receivable and other assets in the ordinary course of
business, and

Operating expenditures............... All expenditures, including, but not limited to, taxes, debt service
payments and capital expenditures, are operating expenditures, except
payments or prepayments of principal and premium on indebtedness if the
payment is:

o required in connection with the sale or other disposition of assets; or

o made in connection with the refinancing or refunding of indebtedness
with the proceeds from new indebtedness or from the sale of equity
interests.

At the election and in the reasonable discretion of our board of
directors, any payment of principal or premium will be deemed to be
refunded or refinanced by any indebtedness incurred or to be incurred by
us within 180 days before or after that payment to the extent of the
principal amount of that indebtedness.

Operating expenditures do not include:

o capital expenditures made for acquisitions or for capital improvements;

A-2

o payment of transaction expenses relating to interim capital
transactions; or

o distributions.

Where capital expenditures are made partially for acquisitions or capital
improvements and partially for other purposes, our board of directors'
good faith allocation between the amounts paid for each will be
conclusive.

Operating surplus.................... For any period prior to liquidation on a cumulative basis, operating
surplus is:

(a) the sum of:

(1) $7.5 million,

(2) any net positive working capital on hand as of the close of business
on the closing of this offering,

(3) all cash receipts for the period beginning on the closing of this
offering and ending on last day of that period, other than cash
receipts from interim capital transactions, and

(4) all cash receipts after the end of that period but on or before the
date of determination of operating surplus for that period resulting
from working capital borrowings;
less

(b) the sum of:

(1) operating expenditures for the period beginning on the closing of this
offering and ending with the last day of that period, and

(2) the amount of cash reserves that is necessary or advisable in the
reasonable discretion of our board of directors to provide funds for
future operating expenditures.

Disbursements made or cash reserves established, increased or reduced
after the end of this period but on or before the date of determination of
available cash for this period will be deemed to have been made,
established, increased or reduced for purposes of determining operating
surplus within this period if our board of directors so determines.
However, "operating surplus" for the quarter in which the liquidation
occurs and any subsequent quarter will be equal to zero.

Unrecovered initial price............ At any time, the unrecovered initial price of a common share is the
initial price of that share, after:

o subtracting all distributions from interim capital transactions made on
that common share;

o subtracting any distributions of cash made in connection with our
dissolution and liquidation made on that common share; and

o adjusting this price as our board of directors determined is needed to
reflect any distribution, subdivision or combination of the common
shares.

Working capital borrowings........... Working capital borrowings are borrowings made exclusively for working
capital purposes and made pursuant to a credit facility or other
arrangement that requires all borrowings under that arrangement to be
reduced to a relatively small amount each year for an economically
meaningful period of time.

A-3

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APPENDIX B
PRO FORMA AVAILABLE CASH FROM OPERATING SURPLUS

The following table shows the calculation of pro forma available cash from
operating surplus and should be read in conjunction with Statia Terminals
Group's consolidated financial statements and Statia Terminals Group's unaudited
pro forma consolidated condensed financial statements.

YEAR ENDED
DECEMBER 31, 1998
(UNAUDITED)
----------------------
(DOLLARS IN THOUSANDS)

Pro forma net income....................................................................... $ 9,698
Add: Provision for income taxes............................................................ 320
Depreciation(a)...................................................................... 10,213
Interest expense and amortization.................................................... 12,651
--------
Earnings before interest expense, income taxes, depreciation and amortization (EBITDA)..... 32,882
Add: Non-cash charges(b)................................................................... 324
Less: Maintenance capital expenditures(c).................................................. (8,854)
Pro forma payment for interest....................................................... (11,792)
Pro forma payment for taxes.......................................................... (369)
--------
Pro forma available cash from operating surplus............................................ $ 12,191
--------
--------

(a) Reflects historical depreciation for Statia Terminals Group less the
historical depreciation for Statia Terminals Southwest, Inc.

(b) Reflects compensation expense related to issuance of stock options.

(c) Represents the actual level of maintenance capital expenditures less actual
maintenance capital expenditures for Statia Terminals Southwest. We estimate
that our maintenance capital expenditures will average approximately
$7.0 million over each of the next three years. See "Management's Discussion
and Analysis of Financial Condition and Results of Operations--Capital
Expenditures".

(d) The pro forma adjustments in the unaudited pro forma financial statements
are based upon currently available information and particular estimates and
assumptions. The unaudited pro forma consolidated condensed financial
statements do not purport to present our financial position or results of
operations had the transactions to be effected at the closing of this
offering actually been completed as of the date indicated. The amount of pro
forma available cash from operating surplus shown above should only be
viewed as a general indication of the amounts of available cash from
operating surplus that may have been generated by us had the transactions
occurred in earlier periods.

(e) The amount of available cash from operating surplus needed to make the
target quarterly distribution for four quarters on the common and
subordinated shares to be outstanding immediately after this offering will
be $20.5 million (approximately $13.7 million for the common shares and
approximately $6.8 million for the subordinated shares). The pro forma
amounts reflected above would not have been sufficient to cover the target
quarterly distribution during the year ended December 31, 1998 on all of the
common and the subordinated shares.

The amount of available cash from operating surplus needed to distribute the
target quarterly distribution for four quarters on the common and
subordinated shares to be outstanding immediately after this offering,
assuming the underwriters exercise their over-allotment option in full, will
be $21.8 million (approximately $15.0 million for the common shares and
approximately $6.8 million for the subordinated shares). The pro forma
amounts reflected above would not have been sufficient to cover the target
quarterly distribution during the year ended December 31, 1998 on all of the
common and the subordinated shares.

B-1

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INDEX TO
FINANCIAL STATEMENTS

Report of Independent Certified Public Accountants......................................................... F-2

Consolidated Balance Sheets as of December 31, 1997 and December 31, 1998.................................. F-3

Consolidated Statements of Income (Loss) for the period from January 1, 1996 through November 27, 1996,
the period from Inception to December 31, 1996, the year ended December 31, 1997 and the year ended
December 31, 1998........................................................................................ F-4

Consolidated Statements of Stockholders' Equity for the period from Inception to December 31, 1996, the
year ended December 31, 1997 and the year ended December 31, 1998........................................ F-5

Consolidated Statements of Cash Flows for the period from January 1, 1996 through November 27, 1996, the
period from Inception to December 31, 1996, the year ended December 31, 1997 and the year ended
December 31, 1998........................................................................................ F-6

Notes to Consolidated Financial Statements................................................................. F-7

F-1

REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS

To the Board of Managing Directors of
Statia Terminals Group N.V. and Subsidiaries:

We have audited the accompanying consolidated balance sheets of Statia Terminals
Group N.V. (a Netherlands Antilles corporation) and Subsidiaries (the "Company")
as of December 31, 1997 and 1998, and the related consolidated statements of
income (loss), stockholders' equity and cash flows for the period from Inception
through December 31, 1996 and for the years ended December 31, 1997 and 1998. We
have also audited the related combined statements of income (loss) and cash
flows of Statia Terminals, Inc. and Subsidiaries and Affiliates (the
"Predecessor Company") for the period from January 1, 1996 through November 27,
1996. These financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these financial
statements based on our audits.

We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in
all material respects, the consolidated financial position of the Company as of
December 31, 1997 and 1998, and the results of its operations and its cash flows
for the period from Inception through December 31, 1996 and for the years ended
December 31, 1997 and 1998 and the results of operations and cash flows of the
Predecessor Company for the period from January 1, 1996 through November 27,
1996, in conformity with generally accepted accounting principles.

ARTHUR ANDERSEN LLP

West Palm Beach, Florida,
February 1, 1999

F-2

STATIA TERMINALS GROUP N.V. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(DOLLARS IN THOUSANDS EXCEPT SHARE AMOUNTS)

DECEMBER 31,
--------------------
1997 1998
-------- --------

ASSETS
CURRENT ASSETS:
Cash and cash equivalents............................................................... $ 6,113 $ 14,061
Accounts receivable--
Trade, less allowance for doubtful accounts of $830 and $785
in 1997 and 1998, respectively....................................................... 10,092 7,562
Other................................................................................... 2,348 2,328
Inventory, net.......................................................................... 1,247 4,528
Prepaid expenses........................................................................ 1,489 1,417
-------- --------
Total current assets............................................................... 21,289 29,896
PROPERTY AND EQUIPMENT, net............................................................... 218,529 209,970
OTHER NONCURRENT ASSETS, net.............................................................. 6,661 5,744
-------- --------
Total assets....................................................................... $246,479 $245,610
-------- --------
-------- --------
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable........................................................................ $ 7,732 $ 9,306
Accrued interest payable................................................................ 2,027 2,027
Other accrued expenses.................................................................. 11,099 15,946
-------- --------
Total current liabilities.......................................................... 20,858 27,279
LONG-TERM DEBT............................................................................ 135,000 135,000
-------- --------
Total liabilities.................................................................. 155,858 162,279
REDEEMABLE PREFERRED STOCK:
Series A, $0.10 par value, 20,000 shares authorized, issued and outstanding.......... $ 20,000 $ 20,000
Series B, $0.10 par value, 10,000 shares authorized, issued and outstanding.......... 10,000 10,000
Series C, $0.10 par value, 10,000 shares authorized, issued and outstanding.......... 10,000 10,000
STOCKHOLDERS' EQUITY:
Preferred stock--
Series D, $0.10 par value, 20,000 shares authorized and issued,
20,000 shares outstanding at December 31, 1997,
13,850 shares outstanding at December 31, 1998..................................... 20,000 13,850
Series E, $0.10 par value, 209,500 shares authorized, 41,000 shares issued,
41,000 shares outstanding at December 31, 1997 and
40,974 shares outstanding at December 31, 1998..................................... 41,000 40,974
-------- --------
Total preferred stock.............................................................. 61,000 54,824
Notes receivable from stockholders...................................................... (1,500) (1,474)
Common stock, $0.10 par value, 100,500 shares authorized, 41,000 shares issued and
outstanding at December 31, 1997, 40,794 shares outstanding at December 31, 1998..... 4 4
Additional paid-in-capital.............................................................. -- 363
Accumulated deficit..................................................................... (8,883) (10,386)
-------- --------
Total stockholders' equity......................................................... 50,621 43,331
-------- --------
Total liabilities and stockholders' equity.............................................. $246,479 $245,610
-------- --------
-------- --------

The accompanying notes are an integral part of these financial statements.

F-3

STATIA TERMINALS GROUP N.V. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME (LOSS)
(DOLLARS IN THOUSANDS)
The Financial Statements of the Company and the Predecessor Company
are not comparable in certain respects (See Note 1).

THE COMPANY
PREDECESSOR ----------------------------------------------
COMPANY PERIOD FROM
----------------- INCEPTION
JANUARY 1, 1996 THROUGH YEAR ENDED DECEMBER 31,
THROUGH DECEMBER 31, ------------------------------
NOVEMBER 27, 1996 1996 1997 1998
----------------- ------------ -------------- ------------

REVENUES................................................. $ 140,998 $ 14,956 $142,499 $136,762
COST OF SERVICES AND PRODUCTS SOLD....................... 129,915 12,803 122,939 106,688
--------- -------- -------- --------
Gross profit......................................... 11,083 2,153 19,560 30,074
ADMINISTRATIVE EXPENSES.................................. 8,282 664 7,735 9,500
--------- -------- -------- --------
Operating income..................................... 2,801 1,489 11,825 20,574
LOSS (GAIN) ON DISPOSITION OF PROPERTY AND EQUIPMENT..... (68) -- (109) 1,652
INTEREST EXPENSE......................................... 4,187 1,613 16,874 16,851
INTEREST INCOME.......................................... 57 40 555 684
--------- -------- -------- --------
Income (loss) before provision for income taxes and
preferred stock dividends.......................... (1,261) (84) (4,385) 2,755
PROVISION FOR INCOME TAXES............................... 629 132 780 320
--------- -------- -------- --------
Income (loss) before preferred stock dividends....... (1,890) (216) (5,165) 2,435
PREFERRED STOCK DIVIDENDS................................ 792 306 3,196 3,938
--------- -------- -------- --------
Net income (loss) available to common stockholders... $ (2,682) $ (522) $ (8,361) $ (1,503)
--------- -------- -------- --------
--------- -------- -------- --------

The accompanying notes are an integral part of these financial statements.

F-4

STATIA TERMINALS GROUP N.V. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
(DOLLARS IN THOUSANDS EXCEPT SHARE AMOUNTS)

PREFERRED PREFERRED NOTES
STOCK--SERIES D STOCK--SERIES E RECEIVABLE COMMON STOCK ADDITIONAL
---------------- ---------------- FROM --------------- PAID-IN ACCUMULATED
SHARES AMOUNT SHARES AMOUNT STOCKHOLDERS SHARES AMOUNT CAPITAL DEFICIT
------ ------- ------ ------- ------------ ------ ------ ---------- -----------

Issuance of common and
preferred stock, November 27,
1996......................... 20,000 $20,000 41,000 $41,000 $ (1,500) 41,000 $4 $ -- $ --

Net income (loss) available to
common stockholders.......... -- -- -- -- -- -- -- -- (522)
------ ------- ------ ------- -------- ------ -- ---- ---------

BALANCE, December 31, 1996..... 20,000 20,000 41,000 41,000 (1,500) 41,000 4 -- (522)

Net income (loss) available to
common stockholders.......... -- -- -- -- -- -- -- -- (8,361)
------ ------- ------ ------- -------- ------ -- ---- ---------

BALANCE, December 31, 1997..... 20,000 20,000 41,000 41,000 (1,500) 41,000 4 -- (8,883)

Net income (loss) available to
common stockholders.......... -- -- -- -- -- -- -- -- (1,503)

Compensation expense related to
issuance of options.......... -- -- -- -- -- -- -- 363 --

Retirement of preferred
stock........................ (6,150) (6,150) -- -- -- -- -- -- --

Other.......................... -- -- (26) (26) 26 (26) -- -- --
------ ------- ------ ------- -------- ------ -- ---- ---------

BALANCE, December 31, 1998..... 13,850 $13,850 40,974 $40,974 $ (1,474) 40,974 $4 $363 $ (10,386)
------ ------- ------ ------- -------- ------ -- ---- ---------
------ ------- ------ ------- -------- ------ -- ---- ---------

TOTAL
-------

Issuance of common and
preferred stock, November 27,
1996......................... $59,504
Net income (loss) available to
common stockholders.......... (522)
-------
BALANCE, December 31, 1996..... 58,982
Net income (loss) available to
common stockholders.......... (8,361)
-------
BALANCE, December 31, 1997..... 50,621
Net income (loss) available to
common stockholders.......... (1,503)
Compensation expense related to
issuance of options.......... 363
Retirement of preferred
stock........................ (6,150)
Other.......................... --
-------
BALANCE, December 31, 1998..... $43,331
-------
-------

The accompanying notes are an integral part of these financial statements.

F-5

STATIA TERMINALS GROUP N.V. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(DOLLARS IN THOUSANDS)
The Financial Statements of the Company and the Predecessor Company
are not comparable in certain respects (See Note 1).

PREDECESSOR
COMPANY
----------------- THE COMPANY
POST PRAXAIR -----------------------------------
ACQUISITION PERIOD FROM
----------------- INCEPTION YEAR ENDED
JANUARY 1, 1996 THROUGH DECEMBER 31,
THROUGH DECEMBER 31, -------------------
NOVEMBER 27, 1996 1996 1997 1998
----------------- ------------ ------- --------

CASH FLOWS FROM OPERATING ACTIVITIES:
Income (loss) before preferred stock dividends.............. $ (1,890) $ (216) $(5,165) $ 2,435
Adjustments to reconcile net income (loss) before preferred
stock dividends to net cash provided by operating
activities:
Depreciation, amortization, and noncash charges........... 12,296 1,011 10,911 12,383
Provision for bad debts................................... 406 -- 11 72
Loss (gain) on disposition of property and equipment...... (68) -- (109) 1,652
(Increase) decrease in accounts receivable--trade......... (1,585) (1,311) 2,060 2,458
(Increase) decrease in other accounts receivables......... 3,237 (1,530) 747 20
(Increase) decrease in inventory.......................... (5,033) 1,950 3,722 (3,281)
(Increase) decrease in prepaid expense.................... (64) (809) (453) 72
(Increase) decrease in other noncurrent assets............ 319 (2) (123) 6
Increase (decrease) in accounts payable................... 3,577 283 (2,202) 1,574
Increase (decrease) in accrued expenses................... (811) 2,859 371 799
Increase (decrease) in payable to affiliates.............. (1,276) -- -- --
--------- ---------- ------- --------
Net cash provided by operating activities............ 9,108 2,235 9,770 18,190
--------- ---------- ------- --------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of property and equipment.......................... $ (14,490) $ (1,203) $(5,344) $(10,714)
Proceeds from sale of property and equipment................ 111 -- 112 122
Proceeds from sale of Statia Terminals Southwest, Inc....... -- -- -- 6,500
Buyout of First Salute Leasing, L.P. assets................. (88,511) -- -- --
Acquisition of Statia Operations, net of $185 of cash
acquired.................................................. -- (173,961) -- --
Acquisition of Petroterminal de Panama, S.A................. -- (1,000) -- --
Transaction costs........................................... -- (9,572) -- --
Accrued transaction costs and purchase price adjustments.... -- 7,703 (7,703) --
--------- ---------- ------- --------
Net cash used in investing activities................ (102,890) (178,033) (12,935) (4,092)
--------- ---------- ------- --------
CASH FLOWS FROM FINANCING ACTIVITIES:
Increase in advances from Parent............................ 203,767 -- -- --
Retirement of preferred stock............................... (18,577) -- -- (6,150)
Bank borrowings............................................. 66,000 -- -- --
Bank repayments............................................. (132,400) -- -- --
Dividends paid to affiliates................................ (25,792) -- -- --
Issuance of 11 3/4% First Mortgage Notes.................... -- 135,000 -- --
Debt costs paid............................................. -- (6,428) -- --
Issuance of preferred stock................................. -- 56,500 -- --
Issuance of common stock.................................... -- 4 -- --
--------- ---------- ------- --------
Net cash provided by (used in) financing
activities......................................... 92,998 185,076 -- (6,150)
--------- ---------- ------- --------
Increase (decrease) in cash and cash equivalents..... (784) 9,278 (3,165) 7,948
CASH AND CASH EQUIVALENTS, at beginning....................... 1,469 -- 9,278 6,113
--------- ---------- ------- --------
CASH AND CASH EQUIVALENTS, at end............................. $ 685 $ 9,278 $ 6,113 $ 14,061
--------- ---------- ------- --------
--------- ---------- ------- --------
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
Cash paid for taxes......................................... $ 823 $ 9 $ 513 $ 369
--------- ---------- ------- --------
--------- ---------- ------- --------
Cash paid for interest...................................... $ 4,455 $ -- $15,334 $ 15,940
--------- ---------- ------- --------
--------- ---------- ------- --------

The accompanying notes are an integral part of these financial statements.

F-6

STATIA TERMINALS GROUP N.V. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(DOLLARS IN THOUSANDS EXCEPT SHARE AMOUNTS)

1. ORGANIZATION AND OPERATIONS

Statia Terminals Group N.V. was formed on September 4, 1996 by Castle
Harlan Partners II, L.P. ("Castle Harlan"), a private equity investment fund
managed by Castle Harlan, Inc., a private merchant bank, certain members of
management and others and commenced operations on November 27, 1996
("Inception"). Statia Terminals Group N.V. and Subsidiaries (the "Company") own
and operate petroleum blending, transshipment and storage facilities located on
the island of St. Eustatius, Netherlands Antilles and at Point Tupper, Nova
Scotia, Canada. The Company's terminaling services are furnished to many of the
world's largest producers of crude oil, integrated oil companies, oil traders,
refiners, petrochemical companies and ship owners. In addition to storage, the
Company provides a variety of related terminal services including bunkering,
crude oil and petroleum product blending and processing, and emergency and spill
response. A subsidiary of the Company provides administrative services for the
Company from its office in Deerfield Beach, Florida.

The Company includes the following primary entities (collectively, the
"Statia Operations"): Statia Terminals Group N.V., Statia Terminals
International N.V. ("Statia"), Statia Terminals N.V. (each incorporated in the
Netherlands Antilles), Statia Terminals Canada, Inc. (incorporated in Nova
Scotia, Canada) and Statia Terminals Southwest, Inc. (incorporated in Texas--the
"Brownsville Facility") which was sold in July 1998 (see Note 15). Significant
intercompany balances and transactions have been eliminated.

The Company was formed during 1996 to acquire the capital stock of Statia
Terminals, Inc. and its subsidiaries and affiliates (the "Predecessor Company")
from Praxair, Inc. ("Praxair"). The combined statements of income (loss) and
cash flows from January 1, 1996 through November 27, 1996 ("the period ended
November 27, 1996"), included the accounts of the Predecessor Company. The
Predecessor Company includes primarily the combination of the following commonly
owned companies: Statia Terminals, Inc. (incorporated in Delaware); Statia
Terminals N.V.; Statia Terminals Point Tupper, Inc. (incorporated in Nova
Scotia, Canada); and Statia Terminals Southwest, Inc. Significant intercompany
balances and transactions have been eliminated.

Prior to January 12, 1996, the Predecessor Company was a wholly owned
subsidiary of CBI Industries, Inc. ("CBI"). On January 12, 1996, pursuant to the
Merger Agreement dated December 22, 1995 (the "Merger"), CBI became a wholly
owned subsidiary of Praxair. This Merger transaction was reflected in the
Predecessor Company's combined financial statements as a purchase effective
January 1, 1996 (see Note 3).

On November 27, 1996, Castle Harlan, members of our management and others
acquired from Praxair all of the outstanding capital stock of Statia Terminals
N.V., Statia Terminals, Inc., their subsidiaries and certain of their affiliates
(the "Castle Harlan Acquisition"). The adjusted purchase price of the Castle
Harlan Acquisition totaled approximately $218,146. The Castle Harlan Acquisition
was paid, in part, by funds received by the Company from the issuance of
$135,000 of 11 3/4% First Mortgage Notes (the "Notes") described in Note 6 and
from the sale of the Company's preferred and common stock. The Castle Harlan
Acquisition has been accounted for under the purchase method of accounting. The
purchase price has been allocated to the assets and liabilities of the Company
based on their fair values as of the date of the Castle Harlan Acquisition. The
investment in Petroterminal de Panama, S.A. is carried at cost and is included
in other noncurrent assets.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Use of Estimates

These consolidated financial statements have been prepared in conformity
with generally accepted accounting principles as promulgated in the United
States which require management to make estimates and assumptions that affect
the reported amounts of assets and liabilities. Management is also required to
make judgments regarding disclosure of contingent assets and liabilities at the
date of the financial statements and the reported amounts of revenues and
expenses during the reporting periods. Actual results could differ from those
estimates.

F-7

STATIA TERMINALS GROUP N.V. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
(DOLLARS IN THOUSANDS EXCEPT SHARE AMOUNTS)

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES--(CONTINUED)

Revenue Recognition

Revenues from terminaling operations are recognized ratably as the services
are provided. Revenues and commissions from bunkering services,
terminaling-related services and bulk product sales are recognized at the time
of delivery of the service or product.

Foreign Currency Translation and Exchange

The consolidated financial statements include the financial statements of
foreign subsidiaries and affiliates translated in accordance with Statement of
Financial Accounting Standards ("SFAS") No. 52 "Foreign Currency Translation."
The assets and liabilities are translated into U.S. dollars at year end exchange
rates. Income and expense items are converted into U.S. dollars at average rates
of exchange prevailing during the year. Substantially all of the Company's
transactions are denominated in U.S. dollars.

Stock-Based Compensation Plans

SFAS No. 123, "Accounting for Stock-Based Compensation," allows for either
the adoption of a fair value method for accounting for stock-based compensation
plans or for the continuation of accounting under Accounting Principles Board
("APB") Opinion No. 25, "Accounting for Stock Issued to Employees," and related
interpretations with supplemental disclosures.

The Company has chosen to account for its stock options using the intrinsic
value based method prescribed in APB Opinion No. 25 and, accordingly, does not
recognize compensation expense for stock option grants made at an exercise price
equal to or in excess of the fair market value of the stock at the date of grant
to employees. SFAS No. 123 does not impact the Company's results of operations,
financial position or cash flows.

Cash and Cash Equivalents

The Company's and the Predecessor Company's excess cash is invested in
short-term, highly liquid investments with maturities of three months or less.
Such short-term investments are carried at cost, which approximates market, and
are classified as cash and cash equivalents.

Financial Instruments

The Company uses various methods and assumptions to estimate the fair value
of each class of financial instrument. Due to their nature, the carrying value
of cash and cash equivalents, accounts receivable and accounts payable
approximates fair value. The Company's other financial instruments are not
significant.

Inventory

Inventory of oil products is valued at the lower of weighted average cost
or estimated market value.

Property and Equipment

Property and equipment are stated at cost less accumulated depreciation.
Depreciation expense is computed using the straight-line method over the
estimated useful lives of the respective assets. Additions to property and
equipment, replacements, betterments and major renewals are capitalized. Repair
and maintenance expenditures which do not materially increase asset values or
extend useful lives are expensed.

SFAS No. 121, "Accounting for the Impairment of Long-Lived Assets and for
Long-Lived Assets to be Disposed Of," requires that long-lived assets and
certain identifiable intangibles to be held and used by an entity be reviewed
for impairment whenever events or changes in circumstances indicate that the
carrying amount of

F-8

STATIA TERMINALS GROUP N.V. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
(DOLLARS IN THOUSANDS EXCEPT SHARE AMOUNTS)

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES--(CONTINUED)
any asset may not be recoverable. SFAS No. 121 also requires that long-lived
assets and certain identifiable long-lived assets to be disposed of be reported
at the lower of carrying amount or fair value less cost to sell. The Company
continually evaluates factors, events and circumstances which include, but are
not limited to, its historical and projected operating performance, specific
industry trends and general economic conditions to assess whether the remaining
estimated useful lives of long-lived assets may warrant revision or that the
remaining balance of long-lived assets may not be recoverable. When such
factors, events or circumstances indicate that long-lived assets should be
evaluated for possible impairment, the Company uses an estimate of undiscounted
cash flow over the remaining lives of the long-lived assets in measuring their
recoverability.

Other Noncurrent Assets

Other noncurrent assets primarily consist of deferred financing costs and
an investment in PTP carried at cost in the amounts of $5,432 and $1,000
respectively, as of December 31, 1997, and $4,521 and $1,000, respectively, as
of December 31, 1998. The deferred financing costs related to establishing debt
obligations are amortized ratably over the life of the underlying obligation.
Debt cost amortization expense was $911 for the years ended December 31, 1997
and 1998.

Income Taxes

The Company and the Predecessor Company determine their tax provision and
deferred tax balances in compliance with SFAS No. 109, "Accounting for Income
Taxes." Under this approach, the provision for income taxes represents income
taxes paid or payable for the current year adjusted for the change in deferred
taxes during the year. Deferred income tax assets and liabilities reflect the
net tax effects of temporary differences between the financial statement bases
and the tax bases of assets and liabilities and are adjusted for changes in tax
rates and tax laws when changes are enacted.

Comprehensive Income

In June 1997, the Financial Accounting Standards Board ("FASB") issued SFAS
No. 130, "Reporting Comprehensive Income." SFAS No. 130 establishes standards
for reporting and display of comprehensive income and its components in the
financial statements. SFAS No. 130 is effective for fiscal years beginning after
December 15, 1997. Reclassification of financial statements for earlier periods
provided for comparative purposes is required. The following types of items are
to be considered in computing comprehensive income: foreign currency translation
adjustments, pension liability adjustments, and unrealized gain/loss on
securities available for sale. For all periods presented herein, there were no
differences between net income and comprehensive income.

Segment Information

In June 1997, the FASB issued SFAS No. 131, "Disclosures about Segments of
an Enterprise and Related Information." SFAS No. 131 establishes standards for
the way that public business enterprises report information about operating
segments in annual financial statements and requires that those enterprises
report selected information about operating segments in interim financial
reports issued to shareholders. It also establishes standards for related
disclosures about product and services, geographic areas, and major customers.
The adoption of SFAS No. 131 had no impact on consolidated results of
operations, financial position or cash flow.

F-9

STATIA TERMINALS GROUP N.V. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
(DOLLARS IN THOUSANDS EXCEPT SHARE AMOUNTS)

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES--(CONTINUED)

Reclassifications

Certain reclassifications were made to the 1996 and 1997 financial
statements in order to conform to the 1998 presentation.

A statement of stockholders' equity for the Predecessor Company is not
presented because the information would not be comparable to that of the
Company.

3. PRAXAIR PURCHASE ACCOUNTING

As discussed in Note 1, prior to January 12, 1996, the Predecessor Company
was a wholly owned subsidiary of CBI. On January 12, 1996, pursuant to the
Merger Agreement dated December 22, 1995, CBI became a wholly owned subsidiary
of Praxair. This Merger transaction was reflected in the Predecessor Company's
combined financial statements as a purchase effective January 1, 1996. The fair
value assigned to the Predecessor Company as of the Merger date was $210,000,
excluding bank borrowings, Praxair and CBI intercompany and advance accounts and
the buyout of certain off-balance-sheet financing ("Merger Value").

The allocation of the Merger Value to the assets and liabilities acquired,
based on the estimated fair value assigned, was as follows:

Merger Value.................................................. $210,000
Less--
Debt acquired............................................... 66,000
Intercompany/advance accounts............................... 44,000
Off-balance sheet obligations............................... 89,000
--------
$ 11,000
--------
--------

Allocation of merger value--
Total current assets........................................ $ 17,000
Property and equipment...................................... 111,000
Other noncurrent assets..................................... 4,000
Liabilities assumed......................................... (121,000)
--------
$ 11,000
--------
--------

In addition, $10,000 of Praxair debt was pushed down to the Predecessor
Company's books effective January 1, 1996. This debt was eliminated in
connection with the Castle Harlan Acquisition.

4. ACQUISITION

As discussed in Note 1, on November 27, 1996, the Company acquired from
Praxair all of the outstanding capital stock of Statia Terminals N.V., Statia
Terminals, Inc., their subsidiaries and certain affiliates. The Castle Harlan
Acquisition has been accounted for under the purchase method of accounting.
Accordingly, the purchase price was allocated to the assets and liabilities of
the Company based on their respective fair values as of the date of the Castle
Harlan Acquisition. The assets of the Company as of the date of the Castle
Harlan Acquisition included certain property and equipment acquired from a
third-party financier by Praxair. (See Note 9.) No portion of the purchase price
of the Company was allocated to intangible assets since the fair value of the
tangible assets exceeded the purchase price. No adjustments were made to the
allocated fair values during 1997 or 1998.

F-10

STATIA TERMINALS GROUP N.V. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
(DOLLARS IN THOUSANDS EXCEPT SHARE AMOUNTS)

4. ACQUISITION--(CONTINUED)
The allocation of the total purchase price to the assets and liabilities
acquired was as follows:

Purchase Price--
Cash paid................................................... $175,146
Stock issued................................................ 43,000
Commissions, fees and expenses.............................. 16,000
--------
Total purchase price..................................... $234,146
--------
--------

Allocation of Purchase Price--
Current assets.............................................. $ 19,570
Property and equipment...................................... 222,907
Other non-current assets.................................... 7,524
Liabilities assumed......................................... (15,855)
--------
Total purchase price..................................... $234,146
--------
--------

F-11

STATIA TERMINALS GROUP N.V. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
(DOLLARS IN THOUSANDS EXCEPT SHARE AMOUNTS)

5. PROPERTY AND EQUIPMENT

Property and equipment consisted of the following as of December 31:

USEFUL LIVES
1997 1998 IN YEARS
-------- -------- ------------

Land........................................................................ $ 1,291 $ 1,291
Land improvements........................................................... 7,964 7,679 5-20
Buildings and improvements.................................................. 2,178 3,303 20-40
Plant machinery............................................................. 216,322 215,017 4-40
Field and office equipment.................................................. 1,677 2,497 3-15
-------- --------
Total property and equipment, at cost.................................. 229,432 229,787
Less--Accumulated depreciation.............................................. 10,903 19,817
-------- --------
Property and equipment, net............................................ $218,529 $209,970
-------- --------
-------- --------

Pursuant to the Castle Harlan Acquisition, the Company agreed with
stockholders to sell the Brownsville Facility and the M/V Statia Responder. The
M/V Statia Responder is still in operation, and the revenues and costs,
including depreciation, associated with operating this asset are included in the
accompanying financial statements. If the Company sells this asset in the
future, the net proceeds from this sale may be required to be used to redeem
certain of the Company's preferred stock. On July 29, 1998, the Company sold the
Brownsville Facility.

F-12

STATIA TERMINALS GROUP N.V. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
(DOLLARS IN THOUSANDS EXCEPT SHARE AMOUNTS)

6. DEBT

The 11 3/4% Notes due November 15, 2003 were issued by subsidiaries of the
Company (the "Issuers") on November 27, 1996 in connection with the Castle
Harlan Acquisition and pay interest on May 15 and November 15 of each year. The
Notes are redeemable, in whole or, in part, at the option of the Issuers at any
time on or after November 15, 2000, at the following redemption prices
(expressed as percentages of principal amount), together with accrued and unpaid
interest, if any, thereon to the redemption date, if redeemed during the
12-month period beginning November 15, in the year indicated:

OPTIONAL
YEAR REDEMPTION PRICE
- --------------------------------------------------- ----------------

2000 105.875%
2001 102.938%
2002 100.000%

Notwithstanding the foregoing, any time on or prior to November 15, 1999,
the Issuers may redeem up to 35% of the aggregate principal amount of the Notes
with the proceeds of one or more Equity Offerings (as defined in the Indenture
to the Notes) at a redemption price equal to 111.75% of the principal amount
thereof, plus accrued and unpaid interest, if any, to the date of redemption,
provided that after giving effect to such redemption, at least 65% of the
aggregate principal amount of the Notes remains outstanding.

The Notes are guaranteed on a full, unconditional, joint and several basis
by each of the indirect and direct active subsidiaries of Statia. The Notes are
also subject to certain financial covenants as set forth in the Indenture, the
most restrictive of which include, but are not limited to the following: (i) a
consolidated fixed charge coverage ratio for the prior four full fiscal quarters
of at least 2.0:1, which, if met, will permit the Company to make additional
borrowings above the Company's revolving credit facility discussed below,
(ii) other limitations on indebtedness and (iii) restrictions on certain
payments. In addition, the Notes place restrictions on the Company's ability to
pay dividends other than distributions from the proceeds of assets held for sale
as discussed above and certain management fees as discussed in Note 12 below.
Except with the occurrence of an event of default, subsidiaries of Statia have
no restrictions upon transfers of funds in the form of dividends, loans or cash
advances. The Issuers are in compliance with the financial covenants set forth
in the Indenture.

The Company has a revolving credit facility (the "Credit Facility") which
allows certain of the Company's subsidiaries to borrow up to $17,500 or the
limit of the borrowing base as defined in the Credit Facility. The Credit
Facility calls for a commitment fee of 0.375% per annum on a portion of the
unused funds. The Credit Facility bears interest at a rate of prime plus 0.5%
(8.25% at December 31, 1998). The Credit Facility constitutes senior
indebtedness of the Company and is secured by a first priority lien on certain
of the Company's accounts receivable and inventory. The Credit Facility is
subject to certain restrictive covenants; however, it is not subject to
financial covenants. The Credit Facility does not restrict the Company's
subsidiaries from transferring funds to the Company in the form of dividends,
loans or cash advances; however, the failure to pay interest when due
constitutes an event of default under the Credit Facility and such event of
default, until cured, prohibits upstream dividend payments to be made to the
Company. The Credit Facility expires on November 27, 1999. At December 31, 1997
and 1998, the Company had approximately $8,058 and $7,982, respectively,
available for borrowing under the Credit Facility as limited by the borrowing
base computation and had no outstanding balance.

7. PREFERRED STOCK

The Company has authorized preferred stock of $26,950 divided into 269,500
shares with a par value of $0.10 consisting of the following shares: (i) 20,000
shares of 8% Series A Cumulative Preferred Stock (the "Series A Preferred
Stock"); (ii) 10,000 shares of 8% Series B Cumulative Preferred Stock (the
"Series B Preferred Stock"); (iii) 10,000 shares of 8% Series C Cumulative
Preferred Stock (the "Series C Preferred

F-13

STATIA TERMINALS GROUP N.V. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
(DOLLARS IN THOUSANDS EXCEPT SHARE AMOUNTS)

7. PREFERRED STOCK--(CONTINUED)

Stock"); (iv) 20,000 shares of 2% Series D Preferred Stock (the "Series D
Preferred Stock"); and (v) 209,500 shares of 2% Series E Preferred Stock (the
"Series E Preferred Stock"). Under certain circumstances as defined in the
Articles of Incorporation and Preferred Stock Agreements (defined below), the
dividend rates on the Series A, Series B and Series C Preferred Stock may
increase from 8% to 14.75%.

The terms of the Series A, Series B and Series C Preferred Stock contain
provisions for redemption beyond the control of the Company and certain
restrictions on the purchase, redemption, defeasance or retirement of the Notes
unless such action is effected (i) at the stated maturity of the Notes, (ii) in
connection with an event of default, (iii) pursuant to the mandatory purchase
offer provisions of the Indenture governing the Notes relating to asset sales or
(iv) pursuant to the redemption provisions of the Indenture relating to
withholding taxes. Other than as permitted by the foregoing provisions, the
Company may not, directly or indirectly, cause or permit Statia or any of its
subsidiaries to, directly or indirectly, purchase, redeem, defease or retire any
Notes if: (i) in the case of the Series A Preferred Stock, (a) the Company shall
not have declared full cash dividends on such series or, if the Indenture
restricts such declaration, full cash dividends on such series to the extent
permitted by the Indenture, or (b) the Company fails to redeem such series when
such redemption is mandatory, (ii) in the case of the Series B Preferred Stock,
the Company fails to redeem such series when such redemption is mandatory,
(iii) in the case of the Series C Preferred Stock, the Company fails to redeem
such series when such redemption is mandatory, (iv) following the occurrence of
certain events set forth in the Preferred Stock Agreements in which the dividend
rate on the Series A, Series B or Series C Preferred Stock is not 8% per annum,
or (v) such purchase, redemption, defeasance or retirement would reduce the
Consolidated Fixed Charge Coverage Ratio (as defined in the Indenture) that, in
certain circumstances, the Series C Preferred Stock may not be redeemed. The
Series A, B and C Preferred Stock in the aggregate of $40,000 was contributed
from Praxair as non-cash equity.

The Series A and Series C Preferred Stock is non-voting stock with a
liquidation preference of one thousand dollars per share. The Company must
redeem these series on the earliest of (i) one year following the maturity date
of the Notes, (ii) one year from the date on which not more than $10,000
aggregate principal amount of the Notes is outstanding (other than those Notes
held or beneficially owned by the Company or any of its affiliates), (iii) the
date on which a holder or beneficial owner of any equity interest in the Company
(other than Praxair) or any option, warrant, convertible security or synthetic
or derivative product related to such equity interest sells, assigns, pledges or
otherwise transfers any such equity interest, except in limited circumstances,
or (iv) 30 days following receipt of notice from the holders of any such series
that the Company has failed to cure a material breach under the Company's Senior
Preferred Stock Agreement or Shareholder Agreement (together the "Preferred
Stock Agreements").

The Series B Preferred Stock is non-voting stock with a liquidation
preference of one thousand dollars per share. The Company must redeem this
series on the earliest of (i) the second anniversary of the initial issuance of
this series of stock, (ii) one year from the date on which not more than $10,000
aggregate principal amount of the Notes is outstanding, (iii) the date on which
a holder or beneficial owner of any equity interest in the Company (other than
Praxair) or any option, warrant, convertible security or synthetic or derivative
product related to such equity interest sells, assigns, pledges or otherwise
transfers any such equity interest, except in limited circumstances, or
(iv) 30 days following receipt of notice from the Series B Preferred
Stockholders that the Company has failed to cure a material breach under the
Preferred Stock Agreements. To the extent that the Company or one of its
affiliates shall have received proceeds from the sale of the M/V Statia
Responder, an emergency and oil spill response vessel owned by a subsidiary, the
Company must redeem the Series B Preferred Stock at the applicable redemption
price therefor out of such proceeds. The Indenture permits the sale of the M/V
Statia Responder and, in the event of such sale, will permit a payment from
Statia to the Company equal to the amount of the liquidation preference plus
accrued and unpaid dividends on the then outstanding Series B Preferred Stock.

F-14

STATIA TERMINALS GROUP N.V. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
(DOLLARS IN THOUSANDS EXCEPT SHARE AMOUNTS)

7. PREFERRED STOCK--(CONTINUED)

If the Company has not redeemed the Series B Preferred Stock by
November 27, 1998, the Company may, following the exercise of any option to
exchange the Series B Preferred Stock into common equity of the Company (which
option must be exercised by the holders of the Series B Preferred Stock prior to
the third anniversary of the closing date, November 27, 1996), either redeem the
shares for cash or exchange them for common equity of the Company. If the shares
are not redeemed for cash or exchanged for common equity of the Company then the
dividend rate on the Company's Series A, Series B and Series C Preferred Stock
increases from 8% to 14.75% effective November 28, 1998. As the Series B
Preferred Stock was not redeemed by the Company prior to November 27, 1998, the
dividend rate on the Company's Series A, Series B and Series C Preferred Stock
increased from 8% to 14.75% effective November 28, 1998, in accordance with the
Company's Preferred Stock Agreements and its Articles of Incorporation.

If Statia or one of its subsidiaries is permitted, under the terms of the
Consolidated Fixed Charge Coverage Ratio test in the Limitation on Additional
Indebtedness covenant in the Indenture, to issue indebtedness in an amount up to
or greater than the liquidation preference of the Series C Preferred Stock plus
accrued but unpaid dividends thereon, and the Company does not redeem the Series
C Preferred Stock at the applicable redemption price under certain conditions,
then the management fees payable to Castle Harlan, Inc. (see Note 12) thereafter
accrue and will not be paid in cash until such redemption occurs. The Indenture
permits one or more restricted payments from Statia to the Company when such
Consolidated Fixed Charge Coverage Ratio tests permits the incurrence of
indebtedness in an amount up to the liquidation preference plus accrued and
unpaid dividends on the then outstanding Series C Preferred Stock.

The Series D Preferred Stock is non-voting stock, has a liquidation
preference of one thousand dollars per share for which the dividends have been
waived. The Indenture permits the sale of the Brownsville facility and permits a
restricted payment from Statia to the Company equal to the net proceeds from
such sale. Such amounts are required to be applied to redeem the Series D
Preferred Stock. On July 29, 1998 the Company sold the Brownsville Facility and
a restricted payment of $6,150 was made from Statia to the Company to redeem a
portion of the Series D Preferred Stock.

The Series E Preferred Stock is voting stock which has a liquidation
preference of one thousand dollars per share for which the dividends have been
waived.

For the period ended December 31, 1996, the Company accrued dividends of
$152, $77 and $77 for Series A, Series B, and Series C Preferred Stock,
respectively. For the year ended December 31, 1997, the Company accrued
dividends of $1,598, $799 and $799 for Series A, Series B and Series C Preferred
Stock, respectively. For the year ended December 31, 1998, the Company accrued
dividends of $1,970, $984 and $984 for the Series A, Series B and Series C
Preferred Stock, respectively.

8. NOTES RECEIVABLE FROM STOCKHOLDERS

Notes receivable from stockholders represent nonrecourse loans made by the
Company to certain members of management and are secured by pledges of the
Company's common stock. The loans bear interest at 6.49% and are due on the
earlier of (i) November 26, 2003, or (ii) sale of the Company's common stock.
These loans have been classified as a reduction to preferred stock in the
accompanying financial statements.

9. LEASES

The Company and the Predecessor Company rent certain facilities, land and
marine equipment under cancelable and noncancelable operating leases. Rental
expense on operating leases was $13,854 (of which $9,870 including $4,270 for
recognition of lease residual value guarantee, relates to the lease described
below), $491, $3,763 and $3,409 for the period ended November 27, 1996, the
period ended December 31, 1996, the year ended

F-15

STATIA TERMINALS GROUP N.V. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
(DOLLARS IN THOUSANDS EXCEPT SHARE AMOUNTS)

9. LEASES--(CONTINUED)

December 31, 1997 and the year ended December 31, 1998, respectively. Future
rental commitments during the years ending 1999 through 2003 are $3,619, $2,569,
$2,504, $2,518 and $837, respectively.

On November 17, 1993, Statia Terminals N.V. and a subsidiary entered into
an agreement with a third-party financier (First Salute Leasing, L.P.) pursuant
to which a portion of its land on St. Eustatius was leased to this third party
for the purpose of construction and operation of five million barrels of crude
oil storage tanks and a single point mooring system. Statia Terminals N.V. acted
as agent for the third party with regard to the construction of the facilities.
Statia Terminals N.V. leased the facility from the third party for a minimum
period of five years beginning February 1, 1995. The aggregate construction cost
incurred for these leased assets totaled $88,513. At the completion of the
initial five year term, Statia Terminals N.V. had the option to extend the
lease, purchase the facility from the lessor, or arrange for the leased
properties to be sold to a third party. In the event of purchase or sale of
these properties, Statia Terminals N.V. was obligated to the lessor for any
shortfall between the purchase or sales price and the lease residual value
guarantee. In connection with the Castle Harlan Acquisition, Praxair terminated
the above First Salute Leasing, L.P. off-balance-sheet financing arrangement and
paid in full all obligations related to this lease.

F-16

STATIA TERMINALS GROUP N.V. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
(DOLLARS IN THOUSANDS EXCEPT SHARE AMOUNTS)

10. INCOME TAXES

The sources of income (loss) by jurisdiction before the provision for
income taxes and preferred stock dividends are:

PREDECESSOR THE COMPANY
COMPANY -----------------------------------------------
---------------- PERIOD FROM
JANUARY 1, 1996 INCEPTION
THROUGH THROUGH YEARS ENDED DECEMBER 31,
NOVEMBER 27, DECEMBER 31, ----------------------------
1996 1996 1997 1998
---------------- ---------------- ------------ ------------

U.S................................................. $ 134 $ (300) $ (1,823) $ (362)
Non-U.S............................................. (1,395) 216 (2,562) 3,117
-------- ------ -------- ------
$ (1,261) $ (84) $ (4,385) $2,755
-------- ------ -------- ------
-------- ------ -------- ------

The provision for income taxes consisted of:

PREDECESSOR THE COMPANY
COMPANY ----------------------------------------------
---------------- PERIOD FROM
JANUARY 1, 1996 INCEPTION
THROUGH THROUGH YEARS ENDED DECEMBER 31,
NOVEMBER 27, DECEMBER 31, ----------------------------
1996 1996 1997 1998
---------------- --------------- ------------ ------------
Current:

U.S.................................................. $ 215 $ -- $ (128) $ --
State................................................ (25) -- (42) --
Non-U.S.............................................. (487) (132) (610) (320)
------ ----- ------ ------
(297) (132) (780) (320)
------ ----- ------ ------
Deferred:
U.S.................................................. (332) -- -- --
------ ----- ------ ------
Total provision................................... $ (629) $(132) $ (780) $ (320)
------ ----- ------ ------
------ ----- ------ ------

The components of the deferred income provision relate primarily to book
versus tax differences in computing depreciation expense.

A reconciliation of income taxes at the U.S. statutory rate of 35% to the
Company's provision for income taxes follows:

Income (loss) before income taxes and preferred
stock dividends................................... $ (1,261) $ (84) $ (4,385) $ 2,755
-------- ----- -------- --------
Tax (provision) benefit at U.S. statutory rate...... 440 29 1,535 (964)
State income taxes.................................. -- -- (14) --
Non-U.S. tax rate differential and losses without
tax benefit....................................... (1,069) (119) (2,301) 644
-------- ----- -------- --------
Other, net.......................................... -- (42) -- --
-------- ----- -------- --------
$ (629) $(132) $ (780) $ (320)
-------- ----- -------- --------
-------- ----- -------- --------

F-17

STATIA TERMINALS GROUP N.V. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
(DOLLARS IN THOUSANDS EXCEPT SHARE AMOUNTS)

10. INCOME TAXES--(CONTINUED)

For 1996, the Company's effective tax rate exceeds the foreign tax
statutory rates as a result of Canadian large corporation tax and losses
incurred by certain subsidiaries for which the Company has not recognized any
benefit.

The principal temporary differences included on the balance sheets net of
effective tax rates are:

THE COMPANY
----------------------------
DECEMBER 31, DECEMBER 31,
1997 1998
------------ ------------

Net operating loss and ITC carryforwards................................... $ 29,682 $ 28,080
Valuation allowance........................................................ (29,682) (28,080)
-------- --------
$ -- $ --
-------- --------
-------- --------

The Company's net deferred tax assets primarily relate to Canadian
investment tax credits and net operating loss carryforwards. The Company has
provided a full valuation allowance against these tax assets, because it is not
certain that the deferred tax assets will be utilized in the future.

The Company's Canadian subsidiaries are subject to a federal large
corporation tax based on 0.225% of the subsidiaries' total equity. As of
April 1, 1997, Nova Scotia enacted a provincial capital tax based on 0.25% of
the subsidiaries' total equity (prorated to 0.1888% for the 1997 calendar year).
The Company has benefited from investment tax credit carryforwards and net
operating tax losses which expire in various amounts through 2003 and 2005,
respectively. The net operating tax loss carryforwards available to offset
Canadian taxable income at December 31, 1997 and 1998 were $58,659 and $55,097,
respectively. The investment tax credit carryforward available to reduce
Canadian income taxes was $7,302 at December 31, 1997 and 1998.

On June 1, 1989, the governments of the Netherlands Antilles and St.
Eustatius approved a Free Zone and Profit Tax Agreement retroactive to
January 1, 1989 and concluding on December 31, 2000. This agreement requires a
subsidiary of the Company to pay a 2% rate on taxable income, as defined, or a
minimum payment of 500 Netherlands Antilles guilders ($282). This agreement
further provides that any amounts paid in order to meet the minimum annual
payment will be available to offset future tax liabilities under the agreement
to the extent that the minimum annual payment is greater than 2% of taxable
income. At December 31, 1998, the amount available to offset future tax
liability under the agreement was approximately $1,412. Currently, the
subsidiary is renegotiating a new agreement with the governments of the
Netherlands Antilles and St. Eustatius that we expect will be effective from
January 1, 1998, through December 31, 2010, with extension provisions to 2015.

Certain of the Company's Netherlands Antilles subsidiaries are not part of
the Free Zone and Profit Tax Agreement and, accordingly, pay Netherlands
Antilles federal income tax at an effective tax rate of up to 45%. Approximately
$67 and $28 of profit tax is included in the Netherlands Antilles tax provision
for the periods ended December 31, 1997 and December 31, 1998, respectively.

11. STOCK OPTIONS

During 1997, the stockholders of the Company approved the 1997 Stock Option
Plan (the "Plan") which allows up to 7,235 shares of $0.10 par value common
stock of the Company to be delivered pursuant to incentive stock option award
agreements or nonqualified stock option award agreements. The incentive stock
option award agreement specifies that after two years of employment from the
date of grant and after each of the following three years, 25% of the option
shares become exercisable unless a Liquidation Event occurs (as defined in the
award agreement) at which time the option becomes fully exercisable. The options
terminate upon termination of employment, except in the event of death,
permanent disability or Company termination other than for substantial cause.
Each option expires ten years after the date of grant.

F-18

STATIA TERMINALS GROUP N.V. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
(DOLLARS IN THOUSANDS EXCEPT SHARE AMOUNTS)

11. STOCK OPTIONS--(CONTINUED)

During November 1997, 2,895 shares of common stock were granted to certain
employees of the Company pursuant to incentive stock option award agreements at
an exercise price of $0.10, which equaled the fair market value of the Company's
common stock. The Company applies APB Opinion No. 25 and related interpretations
in accounting for options granted to employees and directors. Accordingly, no
compensation costs have been recognized related to the stock options granted in
1997.

During December 1998, 2,895 shares of common stock were granted to certain
employees of the Company pursuant to incentive stock option award agreements at
an exercise price of $0.10. The Company recorded the required compensation
expense under APB 25 on the date of grant representing the difference between
the estimated fair value of the options and the exercise price of $0.10 per
share amortized over the vesting period of five years. The fair value of such
options was determined based on an independent appraisal of the Company's common
stock on the date of grant of $810 per share. The total amount of compensation
expense recognized during 1998 related to such options was $39 and is included
in cost of services and products sold and administrative expenses.

The Company also granted 400 options to purchase common stock to
non-employee directors of the Company. These options vested immediately on the
date of grant. The Company recorded $324 of compensation expense under
APB No. 25 on the date of grant. This amount represented the difference between
the fair value of $810 per share and the exercise price of $0.10 per share. The
compensation expense is included in administrative expenses.

Had compensation cost been recorded for the Company's awards based on fair
value at the grant dates consistent with the methodologies of SFAS No. 123, the
Company's 1998 reported net income (loss) available to common stockholders would
have been reduced to the pro forma amounts indicated below:

Net income (loss) available to common stockholders:
As reported........................................................ $(1,503)
Pro forma.......................................................... $(1,960)

Under SFAS 123, the value of each option granted is estimated on the date
of grant using the Black Scholes model with the following assumptions: Risk-free
interest rate--6.3%, dividend yield--0%, and expected life of the option--10
years.

12. RELATED PARTY TRANSACTIONS

Prior to November 27, 1996, the Company engaged in various related-party
transactions with Praxair, CBI and their affiliates. Advances consisted
principally of funds loaned by Praxair/CBI for disbursements, debt service and
dividends offset by the transfer of the Predecessor Company's excess cash. The
advances were non-interest-bearing and did not have a specified maturity date.

The Predecessor Company regularly contracted with affiliates of CBI for the
construction and expansion of its facilities and for certain repair and
maintenance work. During the period ended November 27, 1996, $4,828 was paid to
Praxair or CBI affiliates for these activities related to its property and
equipment. It is not possible to determine whether the results of operations and
financial position of the Predecessor Company would be significantly different
had the Predecessor Company contracted with independent third parties for its
construction, expansion, repair and maintenance needs.

Praxair and CBI directly allocated certain corporate administrative
services to the Predecessor Company including certain legal services, risk
management, tax advice and return preparation, employee benefit administration,
cash management and other services. During the period ended November 27, 1996,
$138 was paid for these direct and indirect administrative services. All
intercompany balances owed to Praxair, CBI and their affiliates were fully paid
in connection with the Acquisition.

F-19

STATIA TERMINALS GROUP N.V. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
(DOLLARS IN THOUSANDS EXCEPT SHARE AMOUNTS)

12. RELATED PARTY TRANSACTIONS--(CONTINUED)

The Company entered into a ten-year management agreement with Castle
Harlan, Inc., to pay an annual management fee of $1,350, plus out-of-pocket
expenses, advisory and strategic planning services subject to certain
conditions. In the event the net proceeds from the sale of the M/V Statia
Responder exceed a specified threshold, Castle Harlan, Inc. may be entitled to a
payment of up to $1,000. This agreement terminates upon a change in control.

13. COMMITMENTS AND CONTINGENCIES

Environmental, Health and Safety Matters

In connection with the Castle Harlan Acquisition, studies were undertaken
by and for Praxair to identify potential environmental, health and safety
matters. Certain matters involving potential environmental costs were identified
at the Point Tupper, Nova Scotia, Canada facility. Praxair has agreed to pay for
certain of these environmental costs subject to certain limitations. Praxair has
paid approximately $2,300 during the period from November 27, 1996 to
December 31, 1998 related to such costs. Based on investigations conducted and
information available to date, the potential cost of additional remediation and
compliance is estimated at $10,000, substantially all of which the Company
believes is the responsibility of Praxair per the Castle Harlan Acquisition
agreement. The Company has also identified certain other environmental, health
and safety costs not covered by the agreement with Praxair for which $1,500 was
accrued in 1996 ($10 of which has been expended through December 31, 1998). The
Company believes that these environmental, health and safety costs, subject to
reimbursements from Praxair, will not have a material adverse effect on the
Company's financial position, cash flows or results of operations.

Litigation

Global Petroleum Corp. ("Global") brought an action against the Company in
December 1993 in the Supreme Court of Nova Scotia seeking the release of certain
petroleum products owned by Global that the Company was holding to secure the
payment of certain invoices. Global secured the release of the products by
posting a $2,000 bond. Global claims damages of $1,200 for breach of contract
and the Company counter-claimed for breach of contract and payment of the
approximately $2,000 of unpaid invoices for product storage and other service.
In April 1996, Global, Scotia Synfuels Limited and their related companies
brought suit against CBI and the Company in the Supreme Court of Nova Scotia
alleging damages in the amount of $100,000 resulting from misrepresentation,
fraud and breach of fiduciary duty associated with the reactivation of the Point
Tupper facility and the sale of their shares in Point Tupper Terminals Company,
a predecessor to Statia Canada, to an affiliate of the Company and CBI.

In May 1994, the U.S. Department of Justice brought an action in the U.S.
District Court for the District of the Virgin Islands against Statia Terminals,
Inc. and Statia Terminals, N.V. for $3,600 of pollution clean-up costs in
connection with the discharge of oil into the territorial waters of the U.S.
Virgin Islands and Puerto Rico by a barge that had been loaded by Statia
Terminals, N.V. at St. Eustatius but was not affiliated with the Company. On
April 16, 1998, the U.S. District Court ruled that it lacked jurisdiction over
Statia Terminals, N.V. and dismissed it from the case.

The Company believes the allegations made in these proceedings are
factually inaccurate and intends to vigorously contest these claims. In
connection with the Castle Harlan Acquisition, Praxair agreed to indemnify the
Company against damages relating to the foregoing proceedings. While no
estimates can reasonably be made of any ultimate liability at this time, the
Company believes the ultimate outcome of these proceedings will not have a
material adverse effect on the Company's business, financial condition or
results of operations.

F-20

STATIA TERMINALS GROUP N.V. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
(DOLLARS IN THOUSANDS EXCEPT SHARE AMOUNTS)

13. COMMITMENTS AND CONTINGENCIES--(CONTINUED)

The Company is involved in various other claims and litigation arising in
the normal course of its business. Based upon analysis of legal matters and
discussions with legal counsel, the Company believes that the ultimate outcome
of these matters will not have a material adverse effect on the Company's
financial position, cash flows and results of operations.

Accrued Expenses

A summary of accrued expenses consists of the following as of December 31:

1997 1998
------- -------

Dividends payable................................................................. $ 3,502 $ 7,440
Personnel and related costs....................................................... 2,296 2,835
Professional fees................................................................. 1,079 1,175
Environmental expenses............................................................ 1,500 1,490
Other............................................................................. 2,722 3,006
------- -------
$11,099 $15,946
------- -------
------- -------

14. SEGMENT INFORMATION

The Company is organized around several different factors the most
significant of which are products and services and geographic location. The
Company's primary products and services are bunker and bulk product sales and
terminaling services (consisting of storage, throughput, dock charges, emergency
response fees and other terminal charges).

The primary measures of profit and loss utilized by the Company's
management to make decisions about resources to be allocated to each division
are earnings before interest, taxes, depreciation, amortization and certain
unallocated profits and losses ("Internal EBITDA") and earnings before interest
taxes and certain unallocated profits and losses ("Internal EBIT").

F-21

STATIA TERMINALS GROUP N.V. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
(DOLLARS IN THOUSANDS EXCEPT SHARE AMOUNTS)

14. SEGMENT INFORMATION--(CONTINUED)

The following information is provided for the Company's bunker and bulk
products sales and terminaling services segments:

PREDECESSOR
PREDECESSOR
COMPANY
COMPANY
---------------- THE COMPANY
---------------- ----------------------------------------------
FOR THE FOR THE
PERIOD FROM PERIOD FROM
JANUARY 1, 1996 INCEPTION FOR THE YEARS ENDED
THROUGH THROUGH DECEMBER 31,
NOVEMBER 27, DECEMBER 31, ----------------------------
1996 1996 1997 1998
---------------- --------------- ------------ ------------
REVENUES:

Terminaling services.................................... $ 44,119 $ 5,693 $ 53,165 $ 66,625
Bunker and bulk product sales........................... 96,879 9,263 89,334 70,137
-------- ------- -------- --------
Total................................................ $140,998 $14,956 $142,499 $136,762
-------- ------- -------- --------
-------- ------- -------- --------
INTERNAL EBITDA:
Terminaling services.................................... $ 15,037 $ 2,351 $ 20,417 $ 30,845
Bunker and bulk product sales........................... 3,277 14 2,699 2,965
-------- ------- -------- --------
Total................................................ $ 18,314 $ 2,365 $ 23,116 $ 33,810
-------- ------- -------- --------
-------- ------- -------- --------
DEPRECIATION AND AMORTIZATION EXPENSE:
Terminaling services.................................... $ 8,832 $ 868 $ 10,093 $ 10,923
Bunker and bulk product sales........................... 541 66 818 498
-------- ------- -------- --------
Total................................................ $ 9,373 $ 934 $ 10,911 $ 11,421
-------- ------- -------- --------
-------- ------- -------- --------
INTERNAL EBIT:
Terminaling services.................................... $ 6,205 $ 1,483 $ 10,324 $ 19,922
Bunker and bulk product sales........................... 2,736 (52) 1,881 2,467
-------- ------- -------- --------
Total................................................ $ 8,941 $ 1,431 $ 12,205 $ 22,389
-------- ------- -------- --------
-------- ------- -------- --------
CAPITAL EXPENDITURES:
Terminaling services.................................... $ 12,868 $ 1,147 $ 4,735 $ 8,274
Bunker and bulk product sales........................... 1,234 -- 58 1,212
Other unallocated....................................... 388 56 551 1,228
-------- ------- -------- --------
Total................................................ $ 14,490 $ 1,203 $ 5,344 $ 10,714
-------- ------- -------- --------
-------- ------- -------- --------

DECEMBER 31,
--------------------
1997 1998
-------- --------

ASSETS:
Terminaling services.......................................................... $220,591 $208,642
Bunker and bulk product sales................................................. 8,964 12,058
Unallocated assets............................................................ 16,924 24,910
-------- --------
$246,479 $245,610
-------- --------
-------- --------

F-22

STATIA TERMINALS GROUP N.V. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
(DOLLARS IN THOUSANDS EXCEPT SHARE AMOUNTS)

14. SEGMENT INFORMATION--(CONTINUED)

A reconciliation of Internal EBIT to the Company's income (loss) before
provision for income taxes and preferred stock dividends is as follows:

PREDECESSOR THE COMPANY
COMPANY -----------------------------------------------
---------------- PERIOD FROM
JANUARY 1, 1996 INCEPTION FOR THE YEARS ENDED
THROUGH THROUGH DECEMBER 31,
NOVEMBER 27, DECEMBER 31, ----------------------------
1996 1996 1997 1998
---------------- ---------------- ------------ ------------

Internal EBIT................................... $ 8,941 $ 1,431 $ 12,205 $ 22,389
Unallocated operating and administrative
expenses...................................... (472) (30) (1,182) (2,726)
Interest expense excluding debt cost
amortization expense.......................... (9,787) (1,525) (15,963) (15,940)
Interest income................................. 57 40 555 684
Loss on sale of Statia Terminals Southwest,
Inc........................................... -- -- -- (1,652)
-------- -------- -------- --------
Income (loss) before provision for income taxes
and preferred stock dividends................. $ (1,261) $ (84) $ (4,385) $ 2,755
-------- -------- -------- --------
-------- -------- -------- --------

The following information is provided with respect to the geographic
operations of the Company:

Caribbean.................................... $126,557 $ 13,194 $122,042 $114,091
Canada....................................... 11,724 1,631 18,586 21,058
United States................................ 2,717 131 1,871 1,613
-------- -------- -------- --------
Total revenues............................ $140,998 $ 14,956 $142,499 $136,762
-------- -------- -------- --------
-------- -------- -------- --------

DECEMBER 31,
--------------------
1997 1998
-------- --------

LONG-TERM ASSETS:
Caribbean..................................................................... $185,702 $183,872
Canada........................................................................ 29,826 29,170
United States................................................................. 8,662 1,672
Panama........................................................................ 1,000 1,000
-------- --------
$225,190 $215,714
-------- --------
-------- --------

Significant Customers

The Company presently has long term storage and throughput contracts with
Bolanter Corporation N.V. (an affiliate of Saudi Aramco) and a subsidiary of
Tosco Corporation which expire in 2000 and 1999, respectively. The Company also
derives revenues from parties unaffiliated with either Saudi Aramco or Tosco,
because of the movement of Saudi Aramco and Tosco products through the Company's
terminals. Additionally, the Company sells bunker fuels to another affiliate of
Saudi Aramco at its St. Eustatius facility.

F-23

STATIA TERMINALS GROUP N.V. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
(DOLLARS IN THOUSANDS EXCEPT SHARE AMOUNTS)

14. SEGMENT INFORMATION--(CONTINUED)

The following table sets forth such revenues as a percentage of our total
revenue.

PREDECESSOR
COMPANY THE COMPANY
--------------- -------------------------------------------------
JANUARY 1, 1996
THROUGH PERIOD FROM YEARS ENDED DECEMBER 31,
NOVEMBER 27, INCEPTION THROUGH ----------------------------
1996 DECEMBER 31, 1996 1997 1998
--------------- ----------------- ------------ ------------

Saudi Aramco-related revenues
- ------------------------------------------------------------
Storage and throughput contract............................. 6.2% 5.9% 7.0% 7.4%
Unaffiliated third parties.................................. 11.7% 7.7% 6.4% 7.7%
Bunker sales................................................ 1.7% 2.2% 2.1% 1.5%
----- ----- ---- ----
Total..................................................... 19.6% 15.8% 15.5% 16.6%
----- ----- ---- ----
----- ----- ---- ----

Tosco-related revenues
- ------------------------------------------------------------
Storage and throughput contract............................. 4.1% 3.2% 6.9% 7.1%
Unaffiliated third parties.................................. 1.3% 4.7% 3.9% 1.9%
Bunker sales................................................ 0.6% 0.8% 0.1% 0.0%
----- ----- ---- ----
Total..................................................... 6.0% 8.7% 10.9% 9.0%
----- ----- ---- ----
----- ----- ---- ----

Although the Company has long-standing relationships and long-term
contracts with these customers, if such long-term contracts were not renewed or
replaced at the end of their terms, or if the Company otherwise lost any
significant portion of its revenues from these two customers, such
non-renewal/replacement or loss could have a material adverse effect on the
Company's business, financial condition and ability to pay dividends. The
Company also has long-term contracts with other key customers, and there can be
no assurance that these contracts will be renewed at the end of their terms or
that the Company will be able to enter into other long-term contracts on terms
favorable to it, or at all.

No other customer accounted for more than 10% of the Predecessor Company's
or the Company's total revenues in 1996, 1997 or 1998.

15. LOSS ON SALE OF STATIA TERMINALS SOUTHWEST, INC.

On July 29, 1998, the Company sold Statia Terminals Southwest, Inc.
("Southwest") for $6,500 in cash resulting in net proceeds of approximately
$6,150. The Company retained certain of the pre-closing assets and liabilities
of Southwest consisting primarily of accounts receivable and accrued expenses
and agreed to indemnify the purchaser for certain contingent legal and
environmental matters up to a maximum of $500 through July 29, 1999. No
provision has been made in the Company's financial statements for these
contingent matters as management believes it is not probable the Company will
ever be required to provide such indemnification. The net book value of the
assets and liabilities sold on July 29, 1998, was $7,802. The loss on the sale
of Southwest of $1,652 is included in gain (loss) on sale of property and
equipment since substantially all of the value of Southwest was originally
recorded in this account when the Company was acquired.

F-24

STATIA TERMINALS GROUP N.V. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
(DOLLARS IN THOUSANDS EXCEPT SHARE AMOUNTS)

16. VALUATION AND QUALIFYING ACCOUNTS

The table below summarizes the activity in the accounts receivable
valuation account for the periods indicated.

BALANCE, CHARGES DEDUCTIONS, BALANCE,
BEGINNING TO WRITE-OFFS, END OF
OF PERIOD EXPENSE NET PERIOD
--------- -------- ------------- --------

Trade Accounts Receivable
For the period ended November 27, 1996......................... $ 645 $ 406 $ (273) $ 778
For the period ended December 31, 1996......................... 778 -- (9) 769
For the year ended December 31, 1997........................... 769 11 50 830
For the year ended December 31, 1998........................... 830 72 (117) 785
Deferred Tax Asset Valuation Allowance
For the period ended November 27, 1996......................... 30,646 1,000 -- 31,646
For the period ended December 31, 1996......................... 31,646 99 (197) 31,548
For the year ended December 31, 1997........................... 31,548 -- (1,866) 29,682
For the year ended December 31, 1998........................... 29,682 371 (1,973) 28,080

F-25

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