Valero Putting Two Oil Refineries on Market
October 19, 2012, 6:34 p.m. ET
Valero Energy Corp. VLO +5.14% is putting its two California oil refineries on the block, attempting to exit the state ahead of a ratcheting up of air-pollution regulations, people familiar with the matter said.
San Antonio-based Valero has enlisted Citigroup Inc. C +2.50% to help find a buyer for the facilities, these people said, adding that the process is in the early stages.
Valero, one of the largest refiners in the U.S., operates a 78,000-barrel-a-day refinery in Wilmington outside Los Angeles and a 132,000-barrel-a-day refinery in Benicia, in the San Francisco Bay area.
Together the plants represent about 10% of the company's U.S. refining capacity. A Valero spokesman declined to comment. A Citi spokesman also declined to comment.
California in 2006 passed legislation that calls for air emissions to be cut to 1990 levels by the end of this decade, goals that Valero and other refiners have said will cost them hundreds of millions of dollars to meet. Even if the refiners reach those goals, the state is also pushing measures designed to cut demand for the refiners' product—namely, petroleum-based fuels.
Valero and rival Tesoro Corp. TSO +5.50% waged an unsuccessful fight to overturn the legislation in a November 2010 ballot initiative.
"We think state policy...other fiscal policies, regulations, continue to adversely affect the economy" in California, Valero Chief Executive Bill Klesse said late last year at an investor meeting. "We're looking at our options."
Valero has not yet put a price tag on the refineries, one of the people said.
Source: The Wall Street Journal
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