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HOUSTON -- BP's agreement to sell its Texas City, Texas, refinery and a portion of its retail and logistics network in the Southeast to Marathon Petroleum Corp. for $2.5 billion marks the second major milestone in the strategic refocusing of its U.S. fuels business, the company reported.
"Together with the sale of our Carson, Calif., refinery, announced in August, the divestment of Texas City 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," stated Iain Conn, chief executive of BP's global refining and marketing business.
"Marathon Petroleum is a highly respected refiner and marketer. Their 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," Conn continued. "Although largely a merchant refinery, we have decided to also sell certain terminals and marketing assets in the Southeast U.S."
With this deal, the total value of divestments that BP has agreed to since the beginning of 2010 stands at more than $35 billion. BP expects to reach $38 billion by the end of 2013.
As CSNews Online reported yesterday when Marathon announced its acquisition, the Speedway LLC parent will purchase the 475,000-barrel-per-day refinery, associated natural gas liquids pipelines and four marketing terminals in the Southeast United States. BP will also assign certain branded jobber contracts supplying approximately 1,200 retail sites in Tennessee, Mississippi, Alabama and Florida, which could be supplied by the Texas City refinery.
BP, though, will continue to market in the Southeast U.S. through more than 100 retained jobbers and approximately 2,400 branded retail outlets. It also will continue to supply retained BP-branded customers through its logistics network, including the four divested product terminals in Nashville, Tenn.; Jacksonville, Fla.; and Selma and Charlotte, N.C.
BP noted that it will still 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.
"This sale will reduce BP's presence in the Southeast U.S.; however BP remains firmly committed to growing and strengthening our BP-branded retail network and the value of the BP brand east of the Rockies in partnership with BP-branded jobbers and dealers," said Doug Sparkman, president of BP's East of Rockies fuels business. "A number of valued jobbers are affected by this transaction and we are committed to working very closely with Marathon Petroleum to make this transition as smooth as possible."
BP anticipates the transaction with Marathon will close by early 2013. The company first announced its plans to divest its Carson and Texas City refineries in February 2011 as part of a major strategic refocusing of the company's global refining portfolio.
Tesoro Corp. this August agreed to purchase BP's Carson refinery and its ARCO retail network across the Southwest, including approximately 800 dealer-operated sites in southern California, Nevada and Arizona. The San Antonio-based company is also acquiring the ARCO brand and associated registered trademarks, as well as a master franchisee license for the ampm convenience store brand.
As part of its deal with Tesoro, BP will exclusively license the ARCO retail brand rights from Tesoro for northern California, Oregon and Washington and continue to produce transportation fuels at its Cherry Point, Wash., refinery. BP will also retain ownership of the ampm brand.
"BP remains committed to supplying U.S. customers with the fuels, lubricants and petrochemicals they depend on, 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 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 U.S."