BP identifies midstream assets to divest
By OGJ editors
HOUSTON, Oct. 28 -- BP PLC has identified 22 US properties for divestment in a midstream asset review aimed at bolstering profitability of its refining and associated operations.
According to a company document, the review seeks to reduce operational complexity of BP’s logistics infrastructure and “to create a sustainable, long-term business for the fuel value chains (FVCs) and [450,000-b/cd] Texas City refinery.”
FVCs, created in a 2008 refining and marketing reorganization, are regionally integrated refining, logistics, marketing, supply, and trading activities. BP has six of the groups worldwide, two in the US.
According to the document, the asset review aims to “identify the assets that create strategic sources of value as a direct benefit of owning and operating the asset.”
Identified for divestment so far are crude and product pipelines, pipeline interests, and terminals on the Gulf and West Coasts and in the Midwest.
The document said BP at present has no plans to shut down properties identified for divestment for which it finds no buyers.
In the past 2 years, the company has been selling company-owned, company-operated service stations in the US.
Profitability is under stress for all US refiners. For the third quarter this year, BP reported a loss from US refining and marketing of $229 million on a replacement-cost basis before interest and tax, compared to a profit of $338 million in third-quarter 2008. In this year’s second quarter, the loss was $326 million.
BP reported a third-quarter 2009 profit of $1.145 billion from non-US refining and marketing, compared with $1.634 billion in third-quarter 2008 and $1.006 billion in this year’s second quarter.
In the US, BP operates 10,000 miles of liquids pipeline and five refineries with 1.5 million b/d of total capacity.