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Marathon takes over running of troubled refinery after BP sells up

The oil giant BP has sold its troubled Texas City oil refinery for $2.5bn (£1.6bn) to United States firm Marathon Petroleum.

The deal is part of the firm's targeted $38bn sell-off by the end of 2013 to cover the costs of the Deepwater Horizon disaster.

The Texas refinery is the third largest in the US but has been problematic for BP since an explosion in 2005 killed 15 people.

BP was fined $50m in 2007 after it pleaded guilty to failing to have adequate maintenance procedures at the refinery.

Two years ago, it paid a further $50.6m fine and promised to spend half a billion dollars on safety improvements, after it was found guilty of failing to fix safety hazards.

In a statement accompanying the sale announcement, Texas City's manager, Keith Casey, pictured, said the refinery had been transformed in the past few years through a "resolute focus on safe, compliant and reliable operations".

Gary Heminger, the president of Marathon Petroleum (MPC), also focused on safety, saying: "We have a long-standing commitment to safe and environmentally conscious operations."

The firm is now the fifth-largest refiner in the US, with six plants, including an existing refinery in Texas City that produces 80,000 barrels a day.

The $2.5bn sale price includes $600m in cash, $1.2bn for inventories and a $700bn "earnout provision". The refinery produces 451,000 barrels a day and employs 2,150 staff. It was acquired by BP when it merged with Amoco in 1998.

In August, BP sold its Carson, California refinery to Tesoro for $2.5bn. Yesterday's deal brought the total value of sell-offs BP has agreed since 2010 to more than $35bn.

The deal included three gas-liquid pipelines and four marketing terminals in the south-east of the US. Marathon has also been handed petrol contracts for 1,200 BP retail locations in four southern US states. Marathon-brand petrol is already sold through 5,000 independently owned retail outlets in 18 states.

"This refinery and related assets complement our current geographic footprint," Mr Heminger said. "The acquisition will provide MPC the opportunity to expand in the south-east and enhance our ability to sell products into export markets."

The 2005 blast at Texas City happened after a unit used to distil petrol and boost its octane content was overfilled, releasing flammable liquid.