As planned at the time of the Total/Petrofina SA merger in 1999, TotalFinaElf SA has agreed to sell downstream assets in the US. Alon Israel Oil Co. Ltd. will purchase the assets, which include the Big Spring refinery in Texas, a related products transportation network, and a 1,700-strong Fina-branded service station network in the southwestern US. The transaction is expected to be complete in July.
The Big Spring refinery has been in service for 70 years, converting mostly Permian basin crudes. The refinery also can be supplied with US Gulf Coast crude through the Amdel pipeline. Big Spring, with capacity of 60,000 b/d, produces fuel products and asphalt marketed in the southwestern US.
Fuel products from the refinery will be distributed in the region via the Trust and River pipeline systems supporting terminals in Big Spring, Abilene, and Wichita Falls, Tex., and Duncan, Okla. Alon will also secure Fina's interest in the Holly-Fina Pipeline Alliance, which supplies products to the El Paso area, New Mexico, and Arizona. Alon's access to this system will grow to 20,000 b/d in 2002.
"The sale of Fina's southwestern business unit and its branded marketing business is part of TotalFinaElf's strategy to focus on world-scale petrochemical and chemical operations in the US,'' said Ron Haddock, Fina president and CEO. Fina and BASF Corp. are constructing the world's largest steam cracker near Fina's Port Arthur, Tex., refinery. Fina also operates the world's largest styrene-polystyrene plant at Carville, La.; the world's largest polypropylene plant at La Porte, Tex.; and a recently expanded polyethylene plant at Bayport, Tex.
Once the deal is completed, Alon Israel Oil will create a new US refining and marketing company to operate the assets. It will be headed by Jeff Morris, as CEO.
Alon Israel Oil says it is gaining stakes and access rights in several petroleum products transportation networks serving the southwestern US. The firm was set up in 1990 by Kibbutz organizations, which have a 37% stake in the venture. Other stakeholders are the private Israeli group Beilsol, 37%, and the investment company Africa-Israel, an affiliate of the Leumi bank, 26%.
The acquisition of the TotalFinaElf assets is the company's first foothold in the US petroleum sector. In fact, the firm says the deal gives it a whole new international dimension. According to its chairman, David Wiessman, the group will now become Israeli's leading oil company.
The divestments follow the sale of the former Total SA's US refining and marketing activities to Ultramar Diamond Shamrock Corp. in 1997. TotalFinaElf will retain a presence in the US downstream sector through the 175,000 b/d Fina refinery at Port Arthur, located in the heart of an important petroleum region and strongly integrated with significant and expanding petrochemicals businesses. The group also has quality specialty chemicals businesses in the US and is actively engaged in exploration and production in the Gulf of Mexico, with about 180 blocks in the deep offshore area.
