Valero May Sell Shuttered Aruba Refinery to China (VLO, PTR, DAL, HES, CHK)

In a filing yesterday with the Securities and Exchange Commission, oil refiner Valero Energy Corp. (NYSE: VLO) said that it has accepted an offer of $350 million plus working capital for its 235,000-barrel/day Aruba refinery. The filing does not specify the acquirer, but a report a Reuters names Petrochina Ltd. (NYSE: PTR) as the buyer.

The potential deal follows the acquisition of a Pennsylvania refinery by Delta Air Lines Inc. (NYSE: DAL). Two European oil trading houses, Gunvor and Vitol, have each acquired a European refinery recently from bankrupt Swiss firm Petroplus. Another large Caribbean refinery, Hovensa in the US Virgin Islands, is a joint venture between Hess Corp. (NYSE: HES) and Venezuela’s state-owned oil company PdVSA and will be shut down soon as well.

According to Reuters, the Aruba refinery would partially refine the heavy, sour crudes from Venezuela and ship the product to China where refining into usable products would be completed.

PetroChina is not likely to have any problem with acquiring the plant because it is not on US territory, but a possible acquisition of the Hovensa plant could trigger a review by federal Committee on Foreign Investment in the United States (CFIUS). The committee has in the past approved the sale of some energy assets in the US, for example by Chesapeake Energy Corp. (NYSE: CHK).

The possible sale by Valero has not boosted its share price today, which is currently down about -0.5% at $22.46 in a 52-week range of $16.40-$28.68.

Paul Ausick