As part the proposed deal, Cenovus will pay $300 million in cash for bp’s stake in the refinery, plus the value of inventory, bp and Cenovus said in separate releases on Aug. 8.
Upon finalizing the transaction, Cenovus—which has held the other 50% interest in the BP-Husky Refining partnership since merging with Husky Energy Inc. in 2021—will take 100% ownership of the venture, as well as assume operatorship of the refinery from bp (OGJ Online, Oct. 26, 2020).
In addition to the refinery sale, the parties confirmed signing a multi-year product supply agreement, further details of which were not revealed.
Pending customary closing conditions, the companies said they expect to complete the deal by yearend 2022.
bp said it expects more than 580 bp employees currently employed at the Toldeo refinery to become Cenovus employees upon the deal’s closing.
For Cenovus, the proposed acquisition will provide an additional 80,000 b/d of downstream throughput capacity, including 45,000 b/d of heavy oil refining capacity, enabling the operator to further optimize its heavy oil value chain through integration with its upstream assets, particularly the ability to run advantaged Canadian crude feedstock, the company said in an Aug. 8 presentation to investors.
“Fully owning the Toledo refinery provides a unique opportunity to further integrate our heavy oil production and refining capabilities,” said Alex Pourbaix, Cenovus’ president and chief executive officer.
“Operating the refinery will open up additional synergies and capital efficiency opportunities, including connectivity with our nearby [175,000-b/d refinery in Lima, Ohio]. This transaction solidifies our refining footprint in the US Midwest and increases our ability to capture margin throughout the value chain,” Pourbaix added.
The company is also eyeing potential turnaround efficiencies via sequencing maintenance events between the Lima and Toledo refineries, the latter of which completed a major turnaround and feedstock optimization project this year to increase the site’s capacity to run high-TAN crude volumes to about 55,000 b/d from 28,000 b/d, Cenovus told investors.
Regarding divestment of its stake in the bp-Husky Toledo refinery, bp said the sale will support the operator’s strategy to instead focus investment on its remaining two US refineries—including the fully owned 152,000-b/d refinery in Whiting, Ind., and 238,450-b/d Cherry Point refinery in Blaine, Wash.—both of which are strategically positioned to serve customers in the US Midwest and Pacific Northwest.
Including the Toledo refinery, bp presently operates seven refineries that include 800,000 b/d of net capacity in the US and 1.6 million b/d internationally.
The proposed Toledo refinery sale follows bp’s June 2022 dual agreement to sell its 50% non-operated interest in the Sunrise oil sands project in Alberta, Canada, to Cenovus, as well as to acquire Cenovus's 35% interest in the Bay du Nord project offshore Newfoundland and Labrador (OGJ Online, June 13, 2022). Following close of that deal—also scheduled by yearend 2022—bp, which currently holds an interest in six exploration licenses offshore Eastern Newfoundland, will no longer have interests in Canadian oil sands production and will shift its focus to potential offshore growth.