Western Europe: Refineries for sale
STRONG refining margins have upped the value of western Europe's better refineries and have brought a surge of corporate activity to what was a fairly static sector. If, as is tipped, Russian companies emerge among the buyers, the outcome is likely to be increased flows of Russian crudes through Europe's big refining centres.
The latest asset to come to market is Chevron's 31% interest in the Nerefco refinery at Europoort, the Netherlands – a 400,000 barrels a day (b/d) facility operated by BP, which owns the other 69%. Chevron says it is inviting offers for the share and also for its marketing operations in the Benelux countries. The firm's chief executive, David O'Reilly, says: "We do not view Europe downstream as a core part of our business and we are decreasing our exposure there." In July, Norway's Hydro and Chevron agreed to sell Hydro Texaco, their 50:50 marketing subsidiary in Norway and Denmark, to Norway's Reitan Servicehandel.
The Nerefco refinery benefits from its size, its deep-water access and its 62,000 b/d catalytic cracker – and a reconfiguration project to increase clean fuels production started this spring. However, buyers might be even more tempted by BP's Coryton refinery, on the Thames in the UK, which the firm put up for sale at the end of June. Coryton, wholly owned by BP, has a capacity of 172,000 b/d and also benefits from a 62,000 b/d catalytic cracker. An adjacent distribution terminal is included and the buyer will be required to sign a long-term supply agreement.
Other substantial assets for sale include Kuwait Petroleum's 80,000 b/d refinery at Europoort and the interests held by Libya's Tamoil in three European refineries – the 100,000 b/d facility at Hamburg, Germany, the 90,000 b/d facility at Cremona, Italy, and the 72,000 b/d refinery at Collombey, Switzerland.
The most active buyer of refining capacity recently has been Petroplus, the Rotterdam-based storage-and-refining specialist, which last year came under the ownership of private-equity firms Carlyle and Riverstone. In its latest acquisition, agreed in July and due to be completed early next year, Petroplus is to buy ExxonMobil's 110,000 b/d refinery at Ingolstadt, Germany, together with local marketing businesses.
Earlier this year, Petroplus acquired the 115,000 b/d Belgian Refining facility at Antwerp. The firm already owns the 60,000 b/d Universal refinery at Antwerp, which was its first refinery acquisition in 1997. In 2000, it added the 68,000 b/d refinery at Cressier, Switzerland, and the 117,000 b/d Teesside refinery in the UK. The latest acquisition will raise its total refining capacity to 470,000 b/d.
However, not all buyers are up-coming independents. At the end of last year, ConocoPhillips became the buyer for the 250,000 b/d refinery at Wilhelmshaven, Germany, sold by the Louis Dreyfus trading firm. ConocoPhillips said it planned to construct a deep-conversion unit at the refinery and the firm is likely to move its Russian crude to the facility.
Russia's Lukoil also wants to place more crude in western Europe and has said it would like to buy up to 300,000 b/d of refining capacity. US firm Valero, which rapidly became the country's largest refiner through a series of acquisitions (see p20), has also made no secret of its interest in a European purchase. However, the rising prices of assets might be a deterrent: Valero's success owes much to the competitive acquisition prices it achieved in the past. Earlier this year the company's chief executive, Bill Klesse, said: "We will not overpay for acquisitions."