Cenovus Energy Inc. agreed on Aug. 8 to purchase the remaining stake in the BP-Husky Toledo Refinery located in Ohio for $300 million in cash.
The Canadian company has owned 50% of the refinery since its combination with Husky Energy in 2021. In a release on Aug. 8, Cenovus said it had reached an agreement to acquire the other 50% interest from BP Plc. In addition, the parties have signed a multiyear product supply agreement, according to the release.
Alex Pourbaix, Cenovus president and CEO, said the transaction solidifies Cenovus’ refining footprint in the U.S. Midwest and increases the company’s ability to capture margin throughout the value chain.
“Operating the refinery will open up additional synergies and capital efficiency opportunities, including connectivity with our nearby Lima Refinery,” Pourbaix said in a statement.
Cenovus expects to realize synergies over the next few years as a result of the transaction, primarily related to the optimization of feedstock and refined product sales, and the longer-term potential to connect the Toledo Refinery with Cenovus’s U.S. refining network.
The Toledo Refinery, which can process up to 160,000 bbl/d of crude oil, has been an important part of the region’s economy for more than 100 years, supporting jobs and safely supplying gasoline, diesel and other essential fuels and products, a separate release by BP noted.
The refinery mrecently completed a major, once in five years turnaround. Funded through the joint venture, the turnaround will improve operational reliability, according to the Cenovus release.
Cenovus will gain an additional 80,000 bbl/d of downstream throughput capacity from the transaction, including 45,000 bbl/d of heavy oil refining capacity. In total, the transaction will bring Cenovus’ total refining capacity to 740,000 bbl/d.
“This refinery is a strategic addition to our downstream business,” added Keith Chiasson, Cenovus’s executive vice president of downstream. “It has provided economic opportunities and critical energy products to the people of Ohio and surrounding areas for decades, and we look forward to continuing that tradition once we assume full ownership of the facility.”
Cenovus’ U.S. operating business will assume operatorship from BP upon closing of the transaction, which is expected before the end of 2022, dependent on the satisfaction of closing conditions.
The transaction follows another recent deal between BP and Cenovus that BP said, taken together, will help reshape BP’s North American oil and gas portfolio for long-term profitable growth.
In June, BP entered into an agreement to sell its interest in the Sunrise oil sands project in Alberta, Canada, to Cenovus and agreed to acquire Cenovus’ interest in the Bay du Nord project offshore Newfoundland and Labrador. Following the close of that deal, also expected in 2022, BP will no longer have interests in oil sands production and will shift its focus to future potential offshore growth in Canada.
In the U.S., after divesting its stake in the BP-Husky Toledo Refinery, BP’s refining portfolio will reduce from three to two facilities.
“We are proud of the business we have built in Toledo, which has provided thousands of good-paying jobs and made significant contributions to Ohio’s economy and America’s energy security for decades. As our partner in Ohio, Cenovus is ideally placed to take this important business into the future,” Dave Lawler, chairman and president of BP America, commented in a release.
Going forward, BP said it will focus investment on its Whiting refinery in Indiana and Cherry Point refinery in Washington, which are strategically positioned to serve customers in the Midwest and Pacific Northwest.
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