Valero Could Sell Refineries

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Valero Could Sell Refineries

SAN ANTONIO -- Valero Energy Corp. is considering selling nearly a third of its North American refineries, in the face of a U.S. economic slowdown that is slowing fuel demand, and is looking east to explore new projects, Reuters reported.

The company is close to selling refineries in Aruba, Memphis, Tennessee and Krotz Springs, La., and has received interest from potential buyers for two other plants in Ardmore, Okla., and Paulsboro, N.J., Valero Chief Executive Bill Klesse said at the National Petrochemical and Refiners Association meeting, according to the report.

"There is no question that I know the values are good for these (three) refineries for our shareholders," Klesse said during the meeting. "It's more driven by the fact that Valero is not going to invest in these plants and take them to the next level."

Klesse declined to name potential buyers of the plants, but said three facilities could be sold by the end of 2008.

Speculation has risen that Petroplus could be a bidder, since it partnered with two private equity firms to buy U.S. refineries, Reuters reported. In addition, Brazilian state oil company Petrobras also said it is eyeing opportunities to buy refineries, the report stated.

The plants account for 840,000 barrels per day of the company's 3.1 million barrel per day capacity, provided through 17 refineries, the report stated.

Meanwhile, Valero is exploring growth in the Middle East and Asia, where demand for fuel has been robust, Klesse said during the meeting.

"We have looked in the last six months at opportunities in the Middle East and we looked at a situation in Asia," Reuters quoted Klesse as saying. "Nothing is imminent."

Klesse told attendees to the meeting he expects prices of crude oil to continue to hold strong despite weaker U.S. demand growth for gasoline, the report stated. In addition, poor margins -- particularly in the U.S. Midwest -- led the company to slow gasoline production even as pump prices hit new peaks, according to the report.

"Oil prices are going to stay high," Klesse said during the meeting. "I'd like to think not $110. The world economy has shown it can handle these high prices."