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    Valero to Sell Refineries, Analysts Say

    Experts outline five refineries that could be up for grabs as the company works to improve efficiencies.

    SAN ANTONIO -- Valero Energy Corp. could sell up to five of its 17 refineries over the next few years, to focus on efficiency at its remaining plants, analysts told Bloomberg News.

    The Valero facilities most likely to be sold are in Aruba; Ardmore, Okla.; Krotz Springs, La.; Memphis, Tenn.; and Sunray in the Panhandle, analysts at Lehman Brothers and Caris & Co. told Bloomberg News.

    However, Valero spokesman, Bill Day, said in the report that the analyst's comments are "purely speculation." He added: "We've said we would take a look at our entire portfolio and see if there are strategic sales that we can make, but we didn't identify specific sites."

    Earlier this year, Valero CEO Bill Klesse said the company would focus on "organic growth," including improving production and efficiency at key refineries, and re-examining others to determine if they fit into Valero's long-term plans, the report stated.

    Valero already sold its Lima, Ohio, refinery for $1.9 billion this summer as part of the strategy, according to the report. While Valero had examined the cost of upgrading the plant to process heavier crude oil, it determined an upgrade would be too costly. Analyst Roger Read, of Natexis Bleichroeder in Houston, told Bloomberg News Valero's sale of the Lima plant "shows us they're more likely to sell noncore facilities."
    The company will concentrate its resources on coastal refineries "so that they're not held captive to any one type of crude," Read added. "If you have a plant in Oklahoma or Sunray, West Texas Intermediate crude is it," he said. "Pipelines come in and pipelines go out -- and they can use only one type of crude."

    The advantage, according to Read, is the flexibility of plants that can take crude oil from oceangoing vessels, because they can accept different types of crude oil, including less costly heavy crude.
    In addition, Valero lined up permits and financing this summer to expand two Gulf Coast refineries -- in Port Arthur and near New Orleans -- although it hasn't committed to an expansion at either facility. Klesse has said Valero would spend as much as $1 billion at each plant if it decides to expand them, the report stated.
    Further, Valero hasn't ruled out buying a refinery.

    "We're also looking at making acquisitions here and around the globe," Day told Bloomberg News. "But we're going to be picky because prices are very high. We're looking for something that we can get at a good price because values have so increased."

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