[Article] ConocoPhillips to sell Cork oil refinery

ConocoPhillips to sell Cork oil refinery
From:ireland.com
Wednesday, 24th January, 2007

The world's fifth-largest oil company, ConocoPhillips, has decided to sell the Whitegate oil refinery in Cork, with the facility likely to be priced between €300 million and €380 million.

The refinery, which was bought as part of Irish National Petroleum for €117 million in 2001, is capable of processing 71,000 barrels of oil per day at peak.

Bids are likely from domestic and international players. Several large oil and gas companies are already exploring in Irish waters, including Shell and Exxon Mobil, which both have refining businesses.

ConocoPhillips is the second-largest refiner in the US and claims to have the fifth-largest reserves of oil in the world, excluding government-owned entities.

It intends to sell Whitegate as a going concern. The refinery currently supplies Irish and European markets. No reason was given for the decision to sell.

Refineries are a key chain in turning crude oil into petrol, kerosene and other related products. Most operate on a 24-hour basis and are usually located in large-scale industrial sites. In recent years some companies have used them to produce liquified natural gas.

ConocoPhillips intends to retain its interest in the Whiddy Island, Bantry Bay oil terminal, where crude oil first arrives into the area via tankers. It has the capacity to accept and store about 8.5 million barrels of oil, much of which comes from the North Sea.

The refinery is believed to be worth $400-$500 million (€307-€383 million), based on industry valuations.

The world is currently suffering from a shortage of oil-refining capacity. In the US no new oil refineries have been built for several decades. Instead of building new facilities, oil companies have tended to expand or rebuild existing ones. There are also major planning problems, with local communities often objecting to having a refinery placed nearby.

In 1999, the government decided to sell the Whitegate refinery, which was owned by Irish National Petroleum.

The corporation recommended to the then minister for public enterprise, Mary O'Rourke, that she accept an offer from the then Tosco Corporation, now ConocoPhillips, to buy the facility and the Whiddy Island oil terminal.

Heads of agreement were signed in July 2000 and the sale was completed on July 16th, 2001. Under the terms of the sale, the US company said it would operate the two facilities for a minimum of 15 years on a fully commercial basis for a consideration of $100 million.

A mandatory regime which required oil companies active in the Irish market to source a proportion of their overall oil requirements from Whitegate was terminated following the change in ownership.

ConocoPhillips's decision to sell the refinery comes a week after Shell announced plans to sell three French refineries.

Other oil companies have also announced plans to reduce their European refining assets in recent months, with BP planning to sell its Coryton refinery in the UK and Exxon Mobil also selling its Ingolstadt refinery in the UK to Swiss refiner Petroplus Holdings.

With headquarters in Houston, Texas, ConocoPhillips operates in more than 40 countries.

The company has about 38,300 employees worldwide and assets of $164 billion. ConocoPhillips stock is listed on the New York Stock Exchange.

The company is the result of a merger in 2002 of Conoco and Phillips Petroleum.

ConocoPhillips is also involved in the gas industry and has shares in other major energy companies and their subsidiaries, such as Duke Energy and Chevron Phillips Chemical Company.