BP selling refineries
March 8, 2012
Buyers are kicking the tires on a pair of U.S. refineries BP PLC (BP, BP.LN) is selling as it reshapes its refining business to process crude from new North American oil basins, the head of BP's refining and fuel marketing business said Tuesday.
BP has said it hopes to collect some $4 billion selling refineries in Texas City, Texas, and Carson, Calif., as part of its broader push to shed $45 billion worth of assets in the wake of 2010's Deepwater Horizon disaster. The Deepwater Horizon rig was drilling a Gulf of Mexico well for BP when it exploded, killing 11 workers and causing the worst offshore oil spill in U.S. history.
"We are seeing interest," BP refining chief Iain Conn said on the sidelines of the IHS CERA Week energy conference.
BP originally said it hoped to complete all of the planned divestitures by the end of this year, but last fall pushed the target date back to the end of 2013. The company still expects to sell the two refineries this year, however, a BP spokesman said Wednesday.
The Carson refinery, which will be sold with BP's California fuel distribution business, including pipelines and trucks, was marketed last year and BP is reviewing offers, Conn said.
The Texas City facility, site of a 2005 fire that killed 17, won't officially be offered for sale until BP meets safety milestones put in place by U.S. regulators in response to the deaths, Conn said. Conn said BP hoped to clear those hurdles this quarter but declined to say when the auction process might begin. "Even though we've not gone to the market, we've seen a number of expressions of interest," he said.
BP has sold 10 refineries in the last 10 years, not including the two it's currently shopping, as it tries to transform its refining business into one geared toward processing heavy Canadian crude from oil sands and shale oil from northern states.
It is investing billions of dollars in its Whiting Refinery outside Chicago so the facility will be able to make gasoline and other fuels from cheap but hard-to-refine Canadian crude. BP also has plans to upgrade facilities in Washington and Ohio, which receive Canadian oil as well.
"The refineries that we're selling ... these are very good refineries," Conn said. With an oversupply of refining capacity pinching margins, facilities must be upgraded at great expense to handle a wider variety of crudes of risk failure, he said. "BP can't afford to invest in all of them at the same time," Conn said.
Conn said he believes refiners in the Atlantic Basin must eliminate up to 7 million barrels per day of refining capacity, or export its products by 2030. Without such curtailment, the market will be greatly oversupplied, he said.
"Since most of it won't be able to export, I think most of it will be under pressure to shut down," he said. About half of that shut-in capacity will be in the U.S. while the rest will be in Europe, he predicted.
Conn said that he is interested in adding refineries, "but probably only now in Asia,"he said.
Source: Dow Jones Newswires
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