BP to sell Texas City refinery for $2.5bn
9 Oct 2012
London - BP is to sell its Texas City refinery and part of its retail and logistics network in the US to Marathon Petroleum Corp. for $2.5 billion. The sale of facility - the scene of a major accident that triggered reviews of process safety worldwide – is expected to close by early 2013.
The sale includes $0.6bn of cash, an estimated $1.2bn for hydrocarbon inventories and a $0.7bn six-year earn-out arrangement based on future margins and refinery throughput.
This will take the total value of the divestments that BP has agreed since the beginning of 2010 is now over $35 billion - towards a target of $38 billion by the end of 2013.
Subject to regulatory and other approvals, Marathon Petroleum will purchase the 475,000 barrel per day refinery, associated natural gas liquids pipelines, and four marketing terminals in the Southeast US.
Marathon Petroleum’s ability to “take on the responsibilities of this large and complex refinery will be good for the long-term future of the business and its employees,” said Iain Conn, chief executive of BP’s global refining and marketing business.
“Although largely a merchant refinery, we have decided to also sell certain terminals and marketing assets in the Southeast US,” he added.
On 23 March, 2005, a fire and explosion occurred at BP’s Texas City Refinery in Texas City, Texas, killing 15 workers and injuring more than 170 others.
Referring, in part, to the incident, refinery manager Keith Casey, said: “During the past several years the Texas City Refinery has been transformed through a resolute focus on safe, compliant, and reliable operations and in recent months has returned to profitability.”
The deal, along with the recently announced sale of its Carson, California refinery, leaves BP with three refineries in the US - all based in northern states.
BP is in the middle of a multi-billion dollar modernisation of its Whiting Refinery in Northwest Indiana. The group’s Cherry Point Refinery in the state of Washington is being upgraded to produce cleaner-burning diesel fuel and the BP Husky joint venture near Toledo, Ohio is investing to improve its gasoline making capabilities.
“BP remains committed to supplying US customers with the fuels, lubricants and petrochemicals they depend on,” Conn said. “When we complete these sales and our Whiting Refinery upgrade project next year, we will have a smaller, well-positioned and highly competitive portfolio of refining and marketing businesses in the US.”
