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SAN ANTONIO -- In a surprising move, Tesoro Petroleum Corp., the financially strapped independent refiner/marketer, terminated its agreement with Williams Energy Partners L.P. to sell its Northern Great Plains Products Systems, instead signing an asset purchase accord with Wichita, Kan.-based Kaneb Pipe Line Partners L.P. for $100 million in cash.
Tesoro, which is looking to shed assets to rid itself of substantial debt, had entered into a tentative agreement to sell the product pipeline to Williams for $110 million, but recently hinted that objectives by the Federal Trade Commission could steer it toward another suitor.
"Our inability to resolve the FTC's concerns relating to the Williams transaction in a time period acceptable to us was the principal reason for terminating the agreement with Williams," said Tesoro President and CEO Bruce A. Smith. "The transaction with Kaneb will allow Tesoro to access new customers and markets, and will improve our Mandan refinery flexibility."
The Products System includes a product pipeline from Mandan, N.D., to Minneapolis and terminals in Jamestown and Moorhead, North Dakota, Sauk Centre and Roseville (Twin Cities), Minnesota.
Earlier this month, Tesoro agreed to sell a total 70 Northern California convenience stores for $67 million in three separate deals. The company continues to operate 290 2Go and Mirastar convenience stores on the West Coast and manages a branded network of some 450 stores. The Mirastar brand is marketed exclusively at Wal-Mart stores through a marketing partnership launched by the two companies in 2000. The oil company operates six refineries in the United States with a combined capacity of nearly 560,000 barrels per day.