Cenovus Energy has agreed to buy the remaining 50% stake in the BP-Husky Toledo refinery in Ohio, US from its joint venture partner BP for $300m in cash.
As a result of the acquisition, Cenovus Energy is expecting to increase its downstream throughput capacity by 80,000 barrels per day (bbls/d). This includes a heavy oil refining capacity of 45,000bbls/d.
Spread over an area of 585 acres in Oregon, the BP-operated Toledo refinery processes up to 160,000 barrels of crude oil per day. The refinery produces diesel, jet fuel, gasoline, asphalt, propane, and other products, which are supplied to the US Midwest.
In 2008, BP sold a 50% stake in the Toledo refinery to Husky Energy, which later merged with Cenovus Energy.
Recently, the Toledo oil refinery saw a major, once in five years turnaround aimed at boosting its operational reliability.
The transaction will take the total refining capacity of Cenovus Energy to 740,000bbls/d.
With full ownership, Cenovus Energy expects to achieve synergies mainly related to optimising the feedstock and refined product sales. In the longer term, the company could connect the refinery with its US refining network.
Cenovus Energy president and CEO Alex Pourbaix said: “Fully owning the Toledo refinery provides a unique opportunity to further integrate our heavy oil production and refining capabilities.
“Operating the refinery will open up additional synergies and capital efficiency opportunities, including connectivity with our nearby Lima Refinery. This transaction solidifies our refining footprint in the U.S. Midwest and increases our ability to capture margin throughout the value chain.”
After the closing of the deal, more than 580 employees of BP in the Toledo oil refinery are anticipated to join Cenovus Energy.
Apart from the transaction, Cenovus Energy and BP have forged a multi-year product supply agreement.
BP America chairman and president Dave Lawler said: “We are proud of the business we have built in Toledo, which has provided thousands of good-paying jobs and made significant contributions to Ohio’s economy and America’s energy security for decades.
“As our partner in Ohio, Cenovus is ideally placed to take this important business into the future.”
Following the sale of the Toledo asset, BP expects to focus its investment on the Whiting refinery in Indiana and Cherry Point refinery in Washington.
The deal is expected to close later this year.
