Valero to buy Chevron's Texaco chain for $1.73bn

US OIL group Valero Energy will acquire Chevron’s chain of Texaco stations in Ireland and Britain and a refinery in Wales in a $1.73 billion (€1.25 billion) deal that gives the US refiner its first foothold in Europe.

The Texaco-branded network is the largest motor fuel dealer in Britain and the second-largest in Ireland, Valero said yesterday.

Texaco runs 270 outlets across Ireland.

Valero, the third-largest refiner in the US behind Exxon Mobil and ConocoPhillips, has long sought to buy a plant in Europe.

It was shut out of a deal to buy Total’s stake in a Dutch refinery in 2009 when Russia’s Lukoil stepped in.

Chevron put its Pembroke refinery, which is capable of processing up to 270,000 barrels a day, up for sale last year.

Chevron is among oil companies selling refineries to cut debt and redeploy spending to oil exploration and development.

Valero hasn’t bought a refinery since its 2005 acquisition of Premcor, and has sold four refineries in that time, two on the US east coast. Pembroke exports half its gasoline output to New York and Florida, Valero said.

“After exiting refining in the US east coast last year, this acquisition provides an opportunity for our company to supply that market more competitively, when it’s economic to do so,” Valero chief executive Bill Klesse said.

The terms of the deal were lower than the $2 billion that sources had said the transaction would be worth.

Valero will pay $480 million for the plant and $250 million for the marketing and logistics assets in the region, including more than 1,000 Texaco-branded wholesale sites, stakes in four major product pipelines, and 11 terminals.

It will also pay $1 billion for inventory.

The deal also includes a commercial and industrial fluids business, seven fuel terminals, stakes in four pipelines and eight aviation fuelling operations.

The transaction is expected to close in the third quarter, pending regulatory approvals.

Valero said the price for the plant was $185 per barrel, a discount of 60 per cent to Valero’s refining value.

Chevron has sold downstream operations, which include refining and retail assets in more than 20 countries in recent months, and is looking for buyers for operations in the Caribbean and some Central America markets. – (Reuters/ Bloomberg)