Chevron Corp has agreed to purchase an oil refinery in Texas which it will use to process the shale oil coming from its operations in the West side of the state. Nevertheless, this facility has a problematic past and space.
The plant has the capacity to process 112,000 barrels per day
The U.S. oil company is expected to disclose the deal to purchase this facility this quarter. This refinery, which can process 112,000 barrels per day, is located in Pasadena, Texas. The plant is operated by Texas-based Pasadena Refining System Inc, a Texas-based unit of Brazil’s state-run oil firm Petroleo Brasileiro SA (Petrobras).
Chevron spokesman Braden Reddall, declined to comment on the matter. For his part, Petrobras spokesman in Rio de Janeiro Carlos Monteiro said that any news regarding an agreement will be disclosed to the market.
A deeply indebted Petrobras put the plant on the market in early 2018. The company had invested more than $1.18 billion into it since it acquired its first stake in the operation in 2006.
Petrobras seeking to pay its debt
Chevron and Petrobras’ negotiations were delayed due to Brazil’s presidential election and the fact that pipeline operator Kinder Morgan Inc dropped out of talks to operate a terminal at the site as a joint venture.
Kinder Morgan spokeswoman Lexey Long declined to comment.
Petrobras has been looking to divest $21 billion in assets to reduce its debt load amid a series of corruption scandals including allegations bribes were paid to executives as a result of the 2006 purchase of the Pasadena plant.
Recently, there has been a rapid expansion of U.S. shale production from the Permian Basin of West Texas and New Mexico. This has stirred demand for new U.S. refining capacity and crude-export facilities. Oil output has soared to an estimated 3.8 million bpd this month, from 1.48 million five years ago.
Chevron to increase shale production
Chevron reported a 150,000 bpd increase in shale production in the third quarter. As a result, it wants a second Gulf Coast facility to handle that crude and better supply its retail gasoline network. The plant produces mostly gasoline and distillates such as diesel.
This refinery covers 192 acres on the Houston Ship Channel and the purchase includes another 274 acres of terminal and other cleared land available for expansion. Furthermore, the site has storage tanks that can hold 5.1 million barrels and a marine terminal for exports.
This Texas refinery is not the only one to switch ownership
There are several small U.S. refineries on the market. Earlier this month, Husky Energy Inc began marketing a 12,000-bpd refinery in Prince George, British Columbia.
Royal Dutch Shell recently began accepting bids for its 75,000-bpd Sarnia, Ontario, refinery; while Delta Air Lines Inc last September began marketing a stake in its 185,000-bpd Trainer, Pennsylvania, refinery.
In November, CVR Energy Inc said it may buy out the public holders of its refining unit, CVR Refining GP, which operates refineries in Kansas and Oklahoma. That decision would unwind a partnership making a future sale easier.
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