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BP Selling Stake in Ohio Refinery

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BP has announced that it has reached an agreement to sell its 50 percent stake in the BP-Husky Toledo Refinery in Ohio to Calgary-based Cenovus.

Under the terms of the deal, Cenovus, which is BP’s joint venture partner in the facility, will pay $300 million for BP’s stake in the refinery, plus the value of inventory, and take over operations when the transaction closes. This is currently expected to occur later in 2022, according to BP, which noted that BP and Cenovus will also enter into a multi-year product supply agreement. 

The BP-operated refinery can process up to 160,000 barrels of crude oil per day and has been an important part of the region’s economy for more than 100 years, BP highlighted. After divesting its stake in the BP-Husky Toledo Refinery, BP’s refining portfolio in the U.S. will reduce from three to two facilities. Going forward, BP noted that it will focus investment on its Whiting refinery in Indiana and Cherry Point refinery in Washington, which it said are strategically positioned to serve customers in the Midwest and Pacific Northwest.

Cenovus outlined that the transaction will give it an additional 80,000 barrels per day of downstream throughput capacity, including 45,000 barrels per day of heavy oil refining capacity. It will also provide the company with opportunities to further optimize its heavy oil value chain through integration with its upstream assets, Cenovus noted, adding that it 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.

“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,”  Dave Lawler, the chairman and president of BP America, said in a company statement.

“As our partner in Ohio, Cenovus is ideally placed to take this important business into the future,” Lawler added in the statement.

Des Gillen, the vice president of the BP-Husky Toledo Refinery, said, “I am incredibly proud of the people who safely operate this refinery every day”.

“Their unwavering dedication and expertise have helped provide a strong foundation for the future of this facility, which will continue to provide jobs in this community and energy for this region for years to come,” Gillen added.

Alex Pourbaix, Cenovus’ president and chief executive officer, said, “fully owning the Toledo Refinery provides a unique opportunity to further integrate our heavy oil production and refining capabilities”.

“Operating the refinery will open up additional synergies and capital efficiency opportunities, including connectivity with our nearby Lima Refinery. This transaction solidifies our refining footprint in the U.S. Midwest and increases our ability to capture margin throughout the value chain,” Pourbaix added.

Keith Chiasson, Cenovus’s executive vice-president of downstream, said, “this refinery is a strategic addition to our Downstream business”.

“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,” Chiasson added.

Cenovus has owned the other 50 percent of the BP-Husky Toledo refinery since its combination with Husky Energy in 2021.

Back in June, BP announced that it had agreed to sell its 50 percent interest in the Sunrise oil sands project in Alberta to Cenovus. Total consideration for the transaction includes $466 million (C$600 million) cash, a contingent payment with a maximum aggregate value of C$600 million expiring after two years, and Cenovus’ 35 percent position in the undeveloped Bay du Nord project offshore Newfoundland and Labrador, BP revealed at the time.

Following the close of this deal, also expected in 2022, BP will no longer have interests in oil sands production.

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