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Tesoro Petroleum Corp., an independent refiner that owns and operates more than 100 convenience stores, yesterday inked a $677-million agreement with London-based BP plc to acquire convenience stores and two refineries.
Upon completion of the deal, which is expected to close by the end of the year, BP will transfer ownership of refineries in Mandan, N.D., and Salt Lake City, along with eight product distribution terminals, bulk storage centers and pipelines, the companies said.
BP will also assign to Tesoro contracts for about 300 Amoco-branded stations that are owned by about 80 Amoco-branded gasoline jobbers. If approved, the deal would leave Tesoro with five refineries with a combined throughput capacity of 390,000 barrels per day. In addition, Tesoro's branded retail network locations would expand to approximately 640 retail locations while adding approximately 700 employees.
"We believe that these additions improve our ability to rapidly supply markets in areas that we have previously targeted for retail and commercial marketing expansion," said Bruce Smith, Tesoro's chairman, president and CEO. "We are also excited about the opportunity to build new business partnerships with both the employees and the independent marketers in these areas,"
BP's Salt Lake City refinery has a crude oil capacity of 55,000 barrels per day (bpd) and is the largest of four refineries in Utah. More than half of its production is gasoline, with principle other products of diesel and jet fuel. The Mandan refinery, which is located near Bismarck, N.D., has a rated capacity of 60,000 bpd.
"We are delighted that Tesoro has recognized these refineries and related operations are top performers, and that they plan to offer employment to all of the current work force," said Robert Malone, BP's regional president for the western United States. "This milestone agreement ensures the markets supplied by the Salt Lake City and Mandan refineries will have their ongoing demand for gasoline and other petroleum products supply met."
Malone noted that the divestment was consistent with BP's global refining strategy, announced in 1999, of retaining only those refineries that provided advantaged supplies for its marketing operations ? particularly in the provision of clean fuels ? or where integrated with other parts of the business such as chemicals.