By the OGJ Online Staff
HOUSTON, Feb. 12 -- BP PLC said Tuesday it is selling its 62,000-b/d Yorktown, Va., refinery to Giant Industries Inc., Scottsdale, Ariz., for $127.5 million.
The price does not include $42 million for the estimated value of inventory at closing. Also, the agreement includes potential payments of up to $25 million if certain refining margin levels are met beginning in 2003 and extending through 2005.
BP CEO John Browne said Tuesday that BP expects refining margins to remain under pressure in 2002 due to "weak oil product demand growth and relatively high inventories, especially in the US."
BP has tried to sell the plant for several years. The refinery, the only one in Virginia, has a product slate that is 50% gasoline and 33% distillate.
Jim Acridge, Giant chairman and CEO, said, "A portion of the market served by the refinery enjoys local distribution benefits similar to those of our current refinery operations. This purchase more than doubles our refining capacity, bringing this total to approaching 100,000 b/d. This refinery has the ability to select from a wide range of world crude oils and raw material supplies to produce a very high percentages of high-value light products that can produce strong netbacks."
Giant operates the 26,000 b/d Ciniza refinery 17 miles east of Gallup, NM, and the 18,600 b/d Bloomfield refinery near Farmington, NM. Although 130 miles apart, they are operated in unison.
The company has a 260-mile oil gathering pipeline system based in Farmington and products terminals in Albuquerque, NM, and Flagstaff, Ariz.