PBF Energy Inc. subsidiary PBF Holding Co. LLC has entered an agreement with Royal Dutch Shell PLC to purchase Shell subsidiary Equilon Enterprises LLC’s (dba Shell Oil Products US) 157,000-b/d dual-coking refinery and integrated logistics assets at Martinez, Calif., for $0.9-1 billion plus the value of hydrocarbon inventory, crude oil supply, and product offtake agreements, and other adjustments.
As part of the proposed deal, PBF will take ownership of the refinery as well as an associated deepwater marine facility, product truck distribution terminals, and crude-product storage installations with about 8 million bbl of shell capacity, the companies said in joint releases.
Deal terms also stipulate that Shell will fund direct and indirect costs of an upcoming first-quarter 2020 turnaround at the facility, as well as other unidentified additional future capital expenses, PBF Energy said.
Shell confirmed its associated branded fuel businesses, aviation terminal, and catalysts business in the area are not included in the proposed sale that, subject to customary closing conditions and regulatory approvals, is scheduled to close in this year’s second half.
PBF Energy said the purchase of the refinery comes as part of the independent refiner’s plan to expand its existing US West Coast operations, which includes the existing 155,000-b/d Torrance, Calif., refinery and related logistics assets purchased from ExxonMobil Corp. in 2016 (OGJ Online, July 7, 2017).
Upon finalizing the deal, PBF Energy said total throughput capacity of its US refining system will increase to more than 1 million b/d.
Divestment of the Martinez refinery aligns with Shell’s strategy to reshape refining efforts towards a smaller, smarter refining portfolio focused on further integration with Shell Trading hubs, chemicals, and marketing to drive resilient returns, according to John Abbott, director of Shell’s downstream business.
The planned Martinez sale follows a series of global downstream divestment initiatives by Shell during the last several years as part of the operator’s plan to concentrate its downstream footprint on a smaller number of assets and markets where it can be most competitive (OGJ Online, Apr. 22, 2019).
PBF Energy and Shell also have agreed to jointly move forward with reviewing feasibility of building a proposed renewable diesel project that would involve repurposing of existing idled equipment at the Martinez refinery to create a renewable fuels production facility at the site.
The companies said they expect detailed feasibility review and planning for this project to occur after closing of the proposed Martinez transaction.
Contact Robert Brelsford at [email protected].
