Valero Considers Sale of Two Refineries

HOUSTON -- Valero Energy Corp., the largest U.S. refiner, is considering a sale or other strategic option for two of its U.S. refineries, spokesman Bill Day said last week. The company is beginning to explore strategic options for its Krotz Springs, La., and Memphis, Tenn., refineries, according to a report by Dow Jones Newswires.

No specific timeline has been set, Day said. "It's a situation where we're just now beginning the process, and it will depend upon the market and interest in those refineries."

These assets are the latest to come under scrutiny as San Antonio-based Valero trims its portfolio to focus on its core plants, which are large coastal refineries with the ability to process cheap, heavy grades of crude, Dow Jones reported.

Valero was an aggressive acquirer of refineries from 2001 to 2005, when asset values in the refining sector were depressed. After its acquisition of Connecticut-based rival Premcor, the company had 17 assets in its portfolio for a short while. The company has since sold the Lima, Ohio, refinery it acquired from Premcor, and is currently looking at options for its Aruba refinery, the wire repot stated.

"Some of the plants that we have in this portfolio are probably worth more to other people," Valero chief executive Bill Klesse said in late 2007.

The Krotz Springs plant has the ability to process 85,000 barrels a day of feedstock, and the Memphis refinery has the ability to process 195,000 barrels a day. Both plants process primarily light, sweet grades of crude, which are more expensive than the discounted crude that Valero focuses upon.

However, the connections between the two plants could make them a desirable package for a refiner with a single asset trying to expand its network, Dow Jones stated.

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