BP has agreed to sell its 266,000 bpd Carson refinery in California and related logistics and marketing assets in the region to Tesoro for $2.5 billion in cash, officials said on Monday.
The deal value includes the estimated value of hydrocarbon inventories and subject to post-closing adjustments. The company noted that the sale is part of a previously-announced plan to reshape BPs US fuels business.
Today's announcement is a significant step in the strategic refocusing of our US fuels business, said Iain Conn, CEO of BP's global refining and marketing business.
Together with the intended sale of Texas City, this will allow us to focus BP's operations and investments exclusively on our three northern US refineries, which are crude feedstock advantaged, and their large and important marketing businesses.
Subject to regulatory and other approvals, Tesoro will acquire the Los Angeles-area refinery as well as the associated logistics network of pipelines and storage terminals and the ARCO-branded retail marketing network in Southern California, Arizona and Nevada.
The sale also includes BP's interests in associated cogeneration and coke calcining operations.
The sale is expected to close before mid-2013.
"As an established refiner and marketer, Tesoro provides a strong future for the business and for its employees," said Conn.
BP will sell the ARCO retail brand rights and exclusively license those rights from Tesoro for Northern California, Oregon and Washington and continue to produce transportation fuels at its Cherry Point, Washington refinery, the company said.
BP will also retain ownership of the ampm convenience store brand and franchise it to Tesoro for use in the Southwest.
In February 2011, BP announced plans to refocus its refining and marketing business on its northern US refineries and find buyers for Carson and the Texas City refinery in Texas.
We are pleased to be delivering on the plan we announced last year and when complete we will have a smaller, but well-positioned and very competitive portfolio of refining and marketing businesses in the US, Conn said.
"BP remains committed to supplying US customers with the fuels, lubricants and petrochemicals they depend on while at the same time delivering long-term growth and profits to our shareholders.
The announcement brings the total value of BP divestments since the beginning of 2010 to $26.5 billion, putting the company closer to its target of $38 billion in asset sales by the end of 2013.
Cover photo courtesy of Thomas Hawk, Flickr