BP sells Texas City Refinery to Marathon Petroleum

BP announced the sale of both its Texas City refinery and a portion of its retail and logistics network in the Southeast U.S. to Marathon Petroleum Corporation for US$2.5 billion.
 
Iain Conn, chief executive of BP’s global refining and marketing business, said that the sale is part of its strategic program to refocus its fuels business in the U.S. “Together with the sale of our Carson, California, refinery announced in August, the divestment of Texas City refinery will allow us to focus BP’s U.S. fuels investments on our three northern refineries which are crude-feedstock advantaged, and their associated marketing businesses”, he said.
Conn gave the assurance that Marathon Petroleum, an independent refiner and marketer, has the ability to take on the responsibility over the large and complex refinery. He said the deal will have long-term benefits for the business and its employees. Marathon Petroleum’s purchase involves the 475,000 barrels per day refinery, associated natural gas liquids pipelines and four marketing terminals in the Southeast U.S.
Under the terms of the agreement, which is still subject to regulatory approvals, BP agreed to assign certain branded jobber contracts supplying around 1,200 retail sites in Tennessee, Mississippi, Alabama and Florida, which could be supplied by the refinery.
BP emphasized that by focusing resolutely on safe, compliant and reliable operations, the company has transformed its Texas City Refinery, which has returned to profitability in recent months.
“It does not, however, fit in with the long-term strategic direction of BP’s global refining portfolio,” said Texas City Refinery Manager Keith Casey, adding that the purchase agreement “is good for our workers, good for our community, and positions the refinery to achieve its full potential over the long-term as part of one of the leading refiner-marketers in the U.S.”
 
Total divestments the company has agreed to now stand at more than US$35 billion since the beginning of 2010, and is expected to increase to US$38 billion by the end of 2013.
BP has reiterated its resolve to remain a significant retailer of fuels in the U.S., with approximately 8,000 BP and ARCO-branded sites in the Midwest, Pacific Northwest and along the East Coast. The company admits that the sale of the Texas refinery will result in the reduction of BP’s presence in the Southeast U.S., but it remains firmly committed to growing and strengthening its BP-branded retail network and the value of the BP brand east of the Rockies. It continues its partnership with BP-branded jobbers and dealers, said Doug Sparkman, president of BP’s East of Rockies fuels business.
 
BP says it will continue to invest heavily in its three refineries in the northern U.S. It is presently undertaking a multi-billion dollar modernization of its Whiting Refinery in Northwest Indiana, while the BP Cherry Point Refinery in Washington state is being upgraded to produce cleaner-burning diesel fuel.
The company is also investing to improve the gasoline making-capabilities of the Husky joint venture near Toledo, Ohio. BP remains committed to supplying U.S. customers with the fuels, lubricants and petrochemicals they need, “while at the same time delivering long-term growth and profits to our shareholders and we are pleased to be delivering on the strategy we announced last year,” Conn added.
When the sales are completed and the Whiting Refinery upgrades are finished next year, BP expects to have a smaller, well-positioned and highly competitive portfolio of refining and marketing assets in the U.S.A.
The company is the second top producer of oil and gas in the U.S. and leads in alternative energy sources, including biofuels and wind power. It has 23,000 U.S. employees, and supports nearly 250,000 domestic jobs through its business activities. (October 10, 2012)