Business Standard

Exclusive: Chevron to buy Texas refinery from Brazil's Petrobras - sources


By Erwin Seba and Jessica Resnick-Ault
HOUSTON (Reuters) - Chevron Corp has agreed to buy a Texas oil refinery with a troubled past and space to handle a coming flow of shale from its West Texas operations, two sources familiar with negotiations said on Monday.
The U.S. oil major is expected to disclose the deal to acquire a 112,000 barrel-per-day (bpd) refinery in Pasadena, Texas, this quarter, the sources said. The plant is operated by Pasadena Refining System Inc, a Texas-based unit of Brazil's state-run oil firm Petroleo Brasileiro SA.
Chevron spokesman Braden Reddall declined to comment on Monday. Carlos Monteiro, a spokesman for Petrobras in Rio de Janeiro, said any communications on an agreement would be disclosed to the market. A deeply indebted Petrobras put the plant on the market in early 2018 after sinking more than $1.18 billion into it since it acquired its first stake in the operation in 2006.
Chevron and Petrobras' negotiations were delayed in part by Brazil's presidential election and pipeline operator Kinder Morgan Inc dropping out of talks to operate a terminal at the site as a joint venture, the sources said.
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. The rapid expansion of U.S. shale production from the Permian Basin of West Texas and New Mexico 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, which reported a 150,000 bpd increase in shale production in the third quarter, has said 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. The 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. The site has storage tanks that can hold 5.1 million barrels and a marine terminal for exports.
The plant's 300-strong work force is represented by the United Steelworkers union, and would become Chevron employees once the deal is completed.
There are several small U.S. refineries on the market. Husky Energy Inc earlier this month 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, according to people familiar with the matter. 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.
(Reporting by Erwin Seba and Jessica Resnick-Ault; writing by Gary McWilliams; editing by Bill Rigby)

(Only the headline and picture of this report may have been reworked by the Business Standard staff; the rest of the content is auto-generated from a syndicated feed.)

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First Published: Jan 29 2019 | 4:48 AM IST

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