BP sells off troubled refinery in US to help defray Deepwater costs

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The Independent Online

BP has sold its troubled Texas City oil refinery for $2.5bn (£1.5bn) to the US company Marathon Petroleum.

The deal is part of the oil giant'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 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, also focused on safety, saying: "We have a long-standing commitment to safe and environmentally conscious operations."

The company 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 gasoline contracts for 1,200 BP retail locations in four southern US States.