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Valero seeking buyers for Aruba site
Valero seeking buyers for Aruba site
http://www.mysanantonio.com/business/local/27889674.html Posted: 09/05/2008 12:00 CDT
Vicki Vaughan - San Antonio Express-News
"Valero Energy Corp. said it will seek other buyers for its Aruba refinery in the Caribbean, as the sale of the plant has stalled, a company official told analysts Thursday.
The sale of the 275,000-barrel-a-day refinery in Aruba “is not dead, but it is at a lull,” said Gene Edwards, executive vice president for business development, adding the company will start talking with other potential buyers.
Valero had said it hoped to sell the Aruba plant by the end of the second quarter. Petroleo Brasileiro SA, Brazil's state-controlled oil company, was said to be an interested buyer, Bloomberg News has reported.
Valero also has said it's looking to sell its plants in Memphis, Tenn., and in Ardmore, Okla. Interest in those plants has come from smaller companies. But because of an uncertain economy and a credit crunch, a sale of the two refineries “probably isn't going to go forward at this time,” Edwards said.
In remarks at the Lehman Brothers Energy/Power Conference, Valero CEO Bill Klesse said Valero is cutting capital expenditures this year and next.
Valero had said it would spend about $4.5 billion on capital expenditures this year, but now plans to spend $3.7 billion to $3.8 billion.
Next year, Valero, the nation's largest refiner, will spend about $4 billion, down from its planned expenditures of $4.5 billion to $5 billion.
The company has delayed a plan to produce paraxylene, which is used to make plastic fibers, at its St. Charles refinery near New Orleans. Valero hadn't set a timetable for paraxylene production.
It also will delay building a coker that can process heavy crude oils at its Port Arthur plant by one to two years. Valero now plans to bring the unit online closer to 2012 or 2013, when it expects to receive heavy Canadian crude oil from the Keystone pipeline. The pipeline, linking western Canada to terminals near Port Arthur, is being expanded to almost double its capacity.
As part of its long-term strategy, Valero continues to shift production toward fuels that are in demand globally, Klesse said.
In the near term, Valero will shift more production from gasoline to distillates, including diesel fuel. Margins for diesel fuel continue to be strong, he said, and the company will build units at St. Charles and Port Arthur to make more.
About 36 percent of Valero's product yield is now distillates and Klesse expects the total to rise to 40 percent in 2009. Key markets for Valero's distillates continue to be Australia, South America and Europe, he said.
“We continue to be very strong financially,” Klesse told analysts. The company had about $2 billion in cash in July and a credit line that it hasn't tapped.
“With these uncertain times in many of the financial markets,” he said, “we intend to hold more cash than we have in the past.”
Valero's stock fell $1.10 to $33.67 a share in a declining market Thursday. Its shares have lost more than half their value in the last year as its margins have been squeezed."
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