California Industry Associations Support Tesoro-BP Deal

SACRAMENTO, Calif. -- The California Independent Oil Marketers Association (CIOMA) and the California Service Station and Auto Repair Association (CSSARA) have given their thumbs-up to the $2.5-billion agreement that calls for Tesoro Corp. to acquire BP's Carson, Calif., refinery and related California assets.

The deal, which was announced in August, includes the ARCO retail network of approximately 800 dealer-operator sites in southern California, Nevada and Arizona, as well as the refinery, as CSNews Online previously reported. In total, the acquisition price covers $1.175 billion for BP's assets, plus the value of the inventory at the time of closing, which is expected to occur in mid-2013.

In a statement of support released this week, the two associations said Tesoro is an important supplier of fuel -- especially unbranded fuel -- to their members, and that the San Antonio-based company has provided communications regarding its expansion of refining and retail assets in California.

"It is important to note that Tesoro is a refiner/supplier that has firsthand knowledge of the California refining and fuel distribution conditions. With significant changes in public policy on the future of petroleum fuels currently in play, they have discovered a way in which to continue operating in California. A large element of our support comes from the security of a knowledgeable player in this uncertain environment, committing to continuation of, and expansion in, operations here," the associations stated.

While the groups support the agreement, they did outline some comments for consideration:

• Tesoro should remain committed, at least, to its current unbranded fuel distribution volumes both in total volumes and regional distribution volumes.

• The associations do not favor requiring the divestment of Tesoro refining capacity in California as part of the deal's approval.

• The associations believe the appropriate agencies should perform market-concentration studies on the increase of Tesoro's retail commitment in southern California and, if any over-balance of market power is discovered, appropriate action be taken to ensure a vigorous diversity of retailers in the market.

• During this investigation, it will be important to discover any additional branding plans Tesoro may have -- not only in the California market, but the entire West Coast.