Tesoro to Buy Valero Refinery

SAN ANTONIO -- Independent oil refiner Tesoro Petroleum Corp. yesterday agreed to buy a refinery and 70 convenience stores in California from Valero Energy Corp. for more than $1 billion.

The Federal Trade Commission (FTC) ordered San Antonio-based Valero to sell the Golden Eagle refinery in Martinez, Calif., and the c-stores before approving its acquisition last year of Ultramar Diamond Shamrock Corp. (UDS).

The refinery can process 168,000 barrel of oil per day, which would increase Tesoro's refining capacity by more than 40 percent. The refinery is currently producing about 105,000 barrels per day of gasoline, about two-thirds of it designed to meet California air quality standards for cleaner-burning fuel, the company said.

Tesoro said it would pay $945 million for the refinery and service stations, plus the value of inventory at closing, estimated at $130 million. The deal includes additional payments of up to $150 million that will be paid if profit margins in California's refining industry are larger from 2003 to 2008 than they were from 1997 to 2001.

Tesoro operates five U.S. refineries, about 675 convenience stores and service stations, including the Tesoro and Mirastar brands.