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FTC approves Tesoro purchase of BP California assets

  • Market: Corporate, Crude oil, Fundamentals, Oil products
  • 17/05/13

Houston, 17 May (Argus) — Federal regulators have determined Tesoro's planned purchase of BP's California assets, including a refinery, will not limit competition in that state, clearing the US independent refiner to close the deal in this quarter.

The $1.175bn purchase includes BP's 260,000 b/d refinery in Carson, California, 800 dealer-operated retail stations in California and neighboring states, and other logistics and power assets.

“This transaction is a unique opportunity for Tesoro to combine the best aspects of two west coast refining, marketing and logistics businesses, resulting in a more efficient world-scale integrated refining, marketing and logistics system,” chief executive Greg Goff said.

Commissioners noted a particularly gloomy forecast for gasoline demand in California as the basis of their finding. Rising vehicle efficiency and falling gasoline demand has left the California market oversupplied and so limited Tesoro's ability to raise prices following the purchase, the commissioners said.

“While the transaction does increase concentration modestly by shifting capacity from BP to Tesoro, it does not reduce the number of refiners with the ability and incentive to use their excess capacity to respond to any effort by Tesoro or any other market participant to exercise market power,” state commissioners said.

Tesoro plans to combine Carson with its neighboring 139,000 b/d refinery in Wilmington, California. The US independent refiner has worked to remove Alaskan North Slope (ANS) crude as a feedstock from its facilities, and considers Carson “an ideal home for cost-advantaged midcontinent crude” supplied by Tesoro rail and marine projects out of the Pacific northwest.

The reconfigured refineries will produce a more efficient Los Angeles refining complex, enhancing crude distillation and feedstock cracking while reducing air emissions, Tesoro said.

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