Tesoro to buy BP refinery, related assets for $2.5 billion

CARSON, Calif., Mon Aug 13, 2012 – Tesoro Corp. said it would buy BP Plc’s refinery here and related assets for about $2.5 billion.

Independent refiner Tesoro said on Monday that it would pay $1.18 billion for BP’s refining and marketing business in Southern California, plus the value of the refinery’s inventory at the time of closing. At current prices, the inventory is valued at about $1.3 billion.

The 266,000-barrel-per-day, high complexity refinery is located south of Los Angeles. The deal also includes a retail marketing network of about 800 dealer-operated gas stations, ownership of BP’s Arco brand, 51 percent ownership in a company-operated 400 megawatt cogeneration facility, and other assets.

Tesoro, which expects the deal to close before mid-2013, said it planned to pay for the purchase with debt and cash generated by dropping some of the assets to its master limited partnership, Tesoro Logistics LP.

BP had said in late July that it was in advanced talks on the sale of the Carson plant, as well as its Texas City, Texas, refinery.

BP announced in February 2011 that it would sell the refineries by the end of 2012 as the company reorients its U.S. refining operations to take advantage of Canadian crude supplies.

BP’s North American products division, which oversees its U.S. refineries, will wrap up a three-year probation term this month stemming from the 2005 explosion that killed 15 people and injured many more.