Chalmette refinery being sold by ExxonMobil, Petroleos de Venezuela

06 19, 2015 by The Advocate

ExxonMobil and a partner are selling their Chalmette refinery to PBF Energy Inc. under a $322 million deal announced Thursday.

Chalmette Refining LLC is a joint venture between affiliates of Petróleos de Venezuela S.A., the state oil company of Venezuela, and ExxonMobil. The refinery has a capacity of 189,000 barrels of oil per day and employs about 1,000 people. About 530 are employees, who will be offered jobs with PBF, and the rest are contractors, PBF spokesman Michael Karlovich said.

New Jersey-based PBF Energy is one of the largest independent refiners in the country, with refineries in Delaware, New Jersey and Ohio. The Chalmette property gives PBF a Gulf Coast location and increases the company’s refining capacity by 35 percent to more than 725,000 barrels of oil per day, PBF Chief Executive Officer Tom Nimbley said.

David Dismukes, head of the LSU Center for Energy Studies, said the sale indicates Venezuela is willing to part with some of its assets.

Last year, plummeting oil prices, a staggering load of debt and a lack of cash pushed the Venezuelan government to shop around Citgo Petroleum Corp. and its three refineries, one of which is in Lake Charles. The company reportedly drew bids of more than $10 billion, but Venezuela backed away from the idea.

The Chalmette deal appears to be a unique alignment of a lot of planets and not part of a larger trend, he said.

“My guess is the Venezuelans were looking to move it. Somebody offered a good deal. Exxon saw an opportunity to make a good profit,” Dismukes said. “These guys (PBF) were obviously looking to expand capacity, expand their position in the market and diversify by being on the Gulf Coast.”

Richard Metcalf, director of environmental affairs for Louisiana Mid-Continent Oil and Gas Association, said the deal makes sense on a number of levels.

For starters, the Chalmette facility differs from ExxonMobil’s usual refinery operation, he said. They are much larger and connected to chemical plants. ExxonMobil’s Baton Rouge refinery has nearly three times Chalmette’s capacity.

In addition, Chalmette is a joint venture with Venezuela, Metcalf said. Selling gets Venezuela some much-needed cash, and ExxonMobil can use its share on its own ventures.

The Chalmette transaction also includes:

The refinery and chemical production facilities

100 percent ownership of the MOEM Pipeline LLC, which provides access to the Louisiana Offshore Oil Port through a third-party pipeline

80 percent interest of both Collins Pipeline Co. and T&M Terminal Co., each of which is in Collins, Mississippi. The firms provide an outlet for the refinery via the Plantation and Colonial Pipelines.

A marine terminal capable of importing feedstocks and loading or exporting finished products

A crude and product storage facility with about 7.5 million barrels of capacity.

“This decision is the result of a strategic assessment of the site and how it fits with our large U.S. Gulf Coast refining portfolio,” said Jerry Wascom, president of ExxonMobil Refining and Supply Co. “We regularly adjust our portfolio of assets through investment, restructuring or divestment consistent with our overall global and regional business strategies.”

The ownership change should be complete by the end of the year.

Follow Ted Griggs on Twitter, @tedgriggsbr.