Valero buying Aruba refinery from El Paso

By OGJ editors
HOUSTON, Feb. 5 -- Valero Energy Corp., San Antonio, has agreed to buy the 315,000 b/d Aruba refinery and related operations from El Paso Corp., Houston, for $465 million.

Valero said it is paying $365 million for the refinery and $100 million for related marine, bunkering, and marketing operations. In addition, Valero is paying $250 million in working capital. The boards of both companies have approved the transaction.

Bank of America Securities analyst Tyler Dann said the transaction terms "appear reasonable and slightly less than we would have expected before the announcement of this transaction."

Valero has expanded its refining holdings in recent years. Bill Greehey, Valero chairman and CEO, said the Aruba refinery has a replacement value of $2.4 billion, noting that more than $640 million has been invested in the last 5 years to improve safety and profitability.

"What's more, this refinery is a great fit for Valero because it processes heavy, sour crude oil, which typically sells at a big discount to sweet crude oil, and it produces a high yield of valuable intermediate feedstocks," Greehey said.

The acquisition is expected to "be highly accretive to our earnings in 2004," he said, adding that the transaction will be funded with cash and equity so Valero's existing debt-to-capitalization ratio of 40.3% will remain unchanged.

Greehey said the Aruban government has agreed to give Valero an existing income tax holiday on all earnings, except retail, through 2011. Greehey said Valero would work with the government to extend the agreement.

The deal is expected to close by Feb. 29. As part of the closing, El Paso will retire a $370 million lease financing associated with the refinery. The estimated $265 million of remaining net cash proceeds will be used for debt reduction.

"The sale of the Aruba refinery is another major step in the execution of our long-range plan," said Doug Foshee, El Paso president and CEO. "With the net proceeds from this transaction, we will have announced or sold approximately $636 million of petroleum assets since Dec. 31, 2003, exceeding the $500 million to $600 million target established in our plan."

This sale supports El Paso's recently announced long-range plan to reduce the company's total debt, net of cash, to approximately $15 billion by Dec. 31, 2005. So far, the company has announced or closed $2.5 billion of the $3.3-3.9 billion of targeted sales.

This is not the first time that El Paso has divested refining holding to Valero. Last year, Valero bought El Paso's Corpus Christi refinery and South Texas refined petroleum product pipeline system and terminal assets for $289 million. Valero's purchase option was part of a June 2001 lease agreement (OGJ Online, Mar. 4, 2003). El Paso acquired these assets through its merger with Coastal Corp. in 2001.

Related Articles

PHMSA proposes pipeline accident notification regulations

07/02/2015 The US Pipeline and Hazardous Materials Safety Administration has proposed new federal oil and gas pipeline accident and notification regulations. ...

Quicksilver Canada gets LNG export approval

07/02/2015 Quicksilver Resources Canada Inc. has received approval from the National Energy Board of Canada to export 20 million tonnes/year of LNG from a pos...

FourPoint Energy to acquire Anadarko basin assets from Chesapeake

07/02/2015 FourPoint Energy LLC, a privately owned Denver company, plans to acquire oil and gas assets from Chesapeake Energy Corp. subsidiaries Chesapeake Ex...

Origin lets contract for Otway basin fields

07/02/2015 Origin Energy Ltd., Sydney, has let a $1.3 million (Aus.) contract to Wood Group Kenny for provision of a detailed engineering design for the onsho...

Puma Energy completes purchase of Murco’s UK refinery, terminals

07/02/2015 Singapore-based Puma Energy Group Pte. has completed its purchase of UK midstream and downstream assets from Murco Petroleum Ltd., a subsidiary of ...

BP to settle federal, state Deepwater Horizon claims for $18.7 billion

07/02/2015 BP Exploration & Production Inc. has agreed in principle to settle all federal and state claims arising from the 2010 Deepwater Horizon inciden...

MARKET WATCH: NYMEX oil prices plummet on crude inventory build, Iran deadline extension

07/02/2015 Oil prices plummeted more than $2/bbl July 1 to settle at a 2-month low on the New York market after a weekly government report showed the first ri...

API to issue recommended practice to address pipeline safety

07/01/2015 The American Petroleum Institute expects to issue a new recommended practice in another few weeks that addresses pipeline safety issues, but the tr...

Shell Midstream Partners takes interest in Poseidon oil pipeline

07/01/2015 Shell Midstream Partners LP has completed its acquisition of 36% equity interest in Poseidon Oil Pipeline Co. LLC from Equilon Enterprises LLC, a s...
White Papers

2015 Global Engineering Information Management Solutions Competitive Strategy Innovation and Leadership Award

The Frost & Sullivan Best Practices Awards recognise companies in a variety of regional and global...
Sponsored by

Three Tips to Improve Safety in the Oil Field

Working oil fields will always be tough work with inherent risks. There’s no getting around that. Ther...
Sponsored by

Pipeline Integrity: Best Practices to Prevent, Detect, and Mitigate Commodity Releases

Commodity releases can have catastrophic consequences, so ensuring pipeline integrity is crucial for p...
Sponsored by

AVEVA’s Digital Asset Approach - Defining a new era of collaboration in capital projects and asset operations

There is constant, intensive change in the capital projects and asset life cycle management. New chall...
Sponsored by

Transforming the Oil and Gas Industry with EPPM

With budgets in the billions, timelines spanning years, and life cycles extending over decades, oil an...
Sponsored by

Asset Decommissioning in Oil & Gas: Transforming Business

Asset intensive organizations like Oil and Gas have their own industry specific challenges when it com...
Sponsored by

Squeezing the Green: How to Cut Petroleum Downstream Costs and Optimize Processing Efficiencies with Enterprise Project Portfolio Management Solutions

As the downstream petroleum industry grapples with change in every sector and at every level, includin...
Sponsored by

7 Steps to Improve Oil & Gas Asset Decommissioning

Global competition and volatile markets are creating a challenging business climate for project based ...
Sponsored by
Available Webcasts


OGJ's Midyear Forecast 2015

When Fri, Jul 10, 2015

This webcast is to be presented by OGJ Editor Bob Tippee and Senior Economic Editor Conglin Xu.  They will summarize the Midyear Forecast projections in key categories, note important changes from January’s forecasts, and examine reasons for the adjustments.

register:WEBCAST


Predictive Analytics in your digital oilfield - Optimize Production Yield and Reduce Operational Costs

When Tue, Jul 7, 2015

Putting predictive analytics to work in your oilfield can help you anticipate failures, plan and schedule work in advance, eliminate emergency work and catastrophic failures, and at the same time you can optimize working capital and improve resource utilization.  When you apply analytic capabilities to critical production assets it is possible to reduce non-productive time and increase your yield.

Learn how IBM's analytics capabilities can be applied to critical production assets with the goal of reducing non-productive time, increasing yield and reducing operations costs.

register:WEBCAST



On Demand

Cognitive Solutions for Upstream Oil and Gas

Fri, Jun 12, 2015

The oil & gas sector is under pressure on all sides. Reserves are limited and it’s becoming increasingly expensive to find and extract new resources. Margins are already being squeezed in an industry where one wrong decision can cost millions. Analyzing data used in energy exploration can save millions of dollars as we develop ways to predict where and how to extract the world’s massive energy reserves.

This session with IBM Subject Matter Experts will discuss how IBM Cognitive Solutions contribute to the oil and gas industry using predictive analytics and cognitive computing, as well as real time streaming for exploration and drilling.

register:WEBCAST


The Alternative Fuel Movement: Four Need-to-Know Excise Tax Complexities

Thu, Jun 4, 2015

Discussion on how to approach, and ultimately embrace, the alternative fuel market by pulling back the veil on excise tax complexities. Taxes may be an aggravating part of daily operations, but their accuracy is crucial in your path towards business success.

register:WEBCAST


Emerson Micro Motion Videos

Careers at TOTAL

Careers at TOTAL - Videos

More than 600 job openings are now online, watch videos and learn more!

 

Click Here to Watch

Other Oil & Gas Industry Jobs

Search More Job Listings >>
Stay Connected