Cenovus Energy Inc. CVE-T will buy the remaining 50% stake it does not already own in Ohio-based BP-Husky Toledo Refinery for $300 million from British energy firm BP PLC, the Canadian company said on Monday.
The deal marks a continuation of BP’s reshaping of its North American oil and gas operations, as it tries to cut its greenhouse gas emissions to appease investors. Cenovus in June bought out BP’s 50% interest in the Sunrise oil sands, where it was already the operator.
Cenovus said the Toledo refinery recently completed a major, once in five years turnaround, and the deal will bring company’s total refining capacity to 740,000 barrels per day.
“Fully owning the Toledo refinery provides a unique opportunity to further integrate our heavy oil production and refining capabilities,” Alex Pourbaix, Cenovus’s chief executive officer, said in a statement.
The Toledo refinery can process up to 160,000 barrels of crude oil each day, providing the Midwest with gasoline, diesel, jet fuel, propane, asphalt, and other products.
“Upon first glance, the $300-million cash payment for 50% of Toledo is less than we would have expected,” Greg Pardy, head of global energy research at RBC Dominion Securities said in a note.
In 2008, Husky Energy Inc acquired a 50% stake in Toledo refinery, owned by BP, forming a joint venture. The stake then moved to Calgary-based Cenovus, when it combined with Husky in 2021.
Following the disposal of its stake in Toledo, BP’s refining operations in the United States will reduce to two facilities from three.
BP said, going forward, it will focus on its Whiting refinery in Indiana and Cherry Point refinery in Washington, which are positioned to serve customers in the Midwest and Pacific Northwest.
With the latest deal, which is expected to close before the end of 2022, Cenovus expects to realize synergies over the next few years.
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