Phillips 66 to sell Alliance refinery in Louisiana due to market conditions

Phillips 66

Phillips 66, one of the top refiners in the U.S., is looking to sell its Alliance refinery, located in Louisianan; as market conditions have pushed it to divest from one of the least profitable refineries in the company’s portfolio.

Firstly, according to Argus Media, the decision to sell the asset came “in response to market conditions and the evolving energy landscape.” The company said to the news outlet. Although the company declined to reveal the price, experts at bank Tudor Pickering Holt said price would be around $500 million.

Secondly, Phillips 66 revealed on Tuesday that the refinery was on the market; it has a capacity of 255,600-barrel-per-day; and it supplied gasoline, diesel and jet fuel for U.S. and Latin American markets. The refinery is around 50 years old.

Thirdly, according to Reuters, the company is already in talks with a potential buyer. However, its identity remains unknown. Reuters also remarked that analysts said potential buyers may be private equity firms and rival Gulf Coast refiners Motiva Enterprises; as well as Valero Energy Corp; or even PBF Energy. None of which responded for comment.

Also recommended for you: UK to boost biomass production, as subsidies due in 2027. Click here to read.

Phillips 66 struggling with low refining margins

Moreover, the selling of the asset might be difficult, especially as the market now favors biofuels and electric vehicles as main ways of transportation; an acquisition of a refinery such as Phillips 66’s might be a counter bet on the transitioning landscape for energy.

However, Garfield Miller, chief executive of investment banker Aegis Energy Advisors, said that a private equity firm might consider buying Alliance as the anchor for a move into motor fuel; seeing Phillips 66 and other oil companies exit as an opportunity.

In addition, there are plenty unsold refineries on the market; such as Royal Dutch Shell’s nearby Convent; however, this could be a door for deals between companies owning the assets. Still, any buyers would face a difficult future with the Biden administration committed to supporting electric-powered cars and trucks; said Robert Yawger, director of energy futures for Mizuho Securities, quoted by Reuters.

Finally, the Alliance refinery came from maintenance in September of last year, into a temporary shutdown through the end of 2020; amid weak refining margins. Phillips 66 invested in building a new 35-mile, 12-inch hydrogen gas pipeline; connecting the facility to hydrogen gas sources earlier this year. However, the company posted a $729 million loss in its refining business during 2Q.

Related posts

European energy crisis an opportunity for Canada


ExxonMobil expands biodiesel agreement with Global Clean Energy


GenCell and EV Motors to jointly launch autonomous EV charging in Israel