BP divests Texas City refinery to Marathon Petroleum for $2.4bn

Global oil and gas giant BP has announced that it has completed the sale of its Texas refinery and a portion of its retail and logistics network in the south-east US to Marathon Petroleum, for an estimated $2.4bn.

The transaction includes about $0.6bn in cash, $1.1bn for the estimated value of hydrocarbon inventory and an earn-out arrangement of $0.7bn that is payable over six years.

As part of the deal, Marathon Petroleum will take ownership of the 475,000 barrel per day refinery and the associated cogeneration plant and natural gas liquids pipelines.

The company will also hold rights to four marketing terminals in the southeast US.

The transaction also includes the purchase of retail marketing contract assignments for about 1,200 branded sites representing about 61,000 barrels per day of gasoline sales, and a 1,040MW cogeneration facility.

Marathon Petroleum president and chief executive officer Gary R Heminger said the refinery is well positioned to help the company gain from the increased supply of North American crude oil.

"The refinery and related assets should enhance our current footprint by integrating well with our existing operations," Heminger added.

"This transaction will provide MPC the opportunity to grow in contiguous markets, expand our export opportunities and further optimise our Gulf Coast operations."

Marathon Petroleum will rename the facility to Galveston Bay refinery.

BP global refining and marketing business chief executive Iain Conn described the completion of the divestment as a major milestone in the refocusing of the company’s US fuels portfolio.

"Together with the sale of our Carson, California, refinery, which we also expect to close this year, the divestment of Texas City allows us to focus BP’s US fuels investments on our three northern refineries, which are crude feedstock advantaged, and their associated marketing businesses," Conn added.

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Image: BP has divested its Texas to Marathon Petroleum for $2.4bn. Photo: Courtesy of Humphrey Bolton.