BP considers sale of dollars 400m US refinery

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The Independent Online
BRITISH Petroleum, the cash- strapped oil giant, is considering selling one of its big US oil refineries as part of a restructuring of its downstream activities in America.

The move concerns BP's Marcus Hook refinery in Pennsylvania, which has a total refining capacity of 180,000 barrels per day. It is one of five refineries owned by BP in the US and is worth about dollars 400m ( pounds 212m), according to some industry estimates.

Staff at the site have been told that it is not considered a core asset in BP's downstream operations in the US, but the company has dismissed industry speculation that the plant would be shut down and mothballed for later use.

A BP spokesman said: 'The company has stated to employees that Marcus Hook is not regarded as a core business. However, it does not necessarily have to be sold. It could be combined with something else to make the plant a bigger or smaller operation.'

The decision follows a fundamental review of BP's refining and marketing activities over the past few months aimed at cutting costs and a massive cash outflow.

On Thursday the group is expected to report a dismal half- yearly result, massive provisions against redundancies and a write- down of asset values. There are rumours that the write-offs could total pounds 1bn and may force the company to pass its second-quarter dividend of 4.2p a share to conserve cash.

Marcus Hook's status within BP reflects the difficult trading conditions faced by the entire US refining sector. Several refineries have closed or cut production in the past year due to over-capacity and depressed demand. Environmental legislation is also pushing up the cost of modernising plant.

There is a widespread belief that the refining industry will undergo a massive rationalisation over the next two years to improve profit margins.

But while many refineries are up for sale, buyers remain scarce. Analysts suggest that this may prompt BP to consider entering a joint venture at Marcus Hook - an inland facility - as an alternative to outright sale.

Unlike BP's other big US refineries, the site is not linked to a petrochemicals plant or a product pipeline. Combining it with another operation could be a viable option.

The company has two other refineries in Ohio and one each in Louisiana and Washington.

BP shares closed unchanged at 212.5p yesterday.

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