Chevron May Sell Facilities in Northeast : Seeking Bids on Gas Stations, Refineries in 12 States, Puerto Rico
Chevron is seeking bids on its two refineries in Philadelphia and Puerto Rico, as well as its network of 4,800 gas stations in 12 Eastern states and 275 gas stations on the Caribbean island, according to a senior executive of the giant San Francisco-based oil company.
Although the executive, Willis J. Price, senior vice president of marketing and supply, said that Chevron has not made a firm decision to sell the properties, its solicitation of bids is a clear signal that it is moving closer to withdrawing from the difficult Northeast market.
“We’re not going to decide until we see what kind of bids we get,” Price said, adding that a final decision on whether to sell will be made by the end of the year. He said bidders are being asked to make their offers by Oct. 18.
Price declined to name the parties who have expressed an interest in acquiring the Chevron assets, but he described them as companies not currently active in the two regions. He did reveal, however, that some oil-producing countries were among those interested.
Kuwait Firm May Be Bidder
“Many of the same players for the Southeastern properties are back,” he said.
The state-owned oil company of Kuwait was a bidder for Chevron’s properties in the Southeastern part of the United States. Those properties were later sold to Sohio.
Analysts said Friday that the Kuwait oil company was probably a potential buyer of the Northeastern assets.
“They very aggressively bid” for the Southeastern assets, said William Randol, an analyst with First Boston, the New York investment bank. “I wouldn’t be surprised if they were interested.”
Last month, Chevron distributed information packets describing the properties to potential buyers. The gas stations are located in states from Virginia to Maine.
Although 672 are company owned, Chevron says it might sell supply contracts for the remaining stations. The Eastern package also includes 26 terminals, two gasoline pipelines and four heating oil businesses.
Chevron said it wants to sell the Eastern assets as one package and the Puerto Rican assets as a second package. Price said the company wants cash.
He said Chevron’s market share in Puerto Rico, where 172 of the 275 stations are company owned, was more than 20%. The 30-year-old refinery, with a capacity to produce 38,000 barrels a day, is in Bayamon.
Heavy Competition
“It’s a tidy little package if someone has a strategic interest in it,” Price said.
About 1,600 people work in Chevron’s Eastern refining and marketing operations, and another 380 work in Puerto Rico.
He said Chevron was considering the sale of its Eastern properties because the company “isn’t as much of a market factor there as in the Southwest or West.”
He said the gasoline refiners and retailers in the East faced heavy competition from cheap imports from Europe and the Middle East.
The East Coast is at the “tail end” of Chevron’s gasoline distribution network, and the company’s 174,000-barrel-a-day refinery in Philadelphia can only supply half of the gasoline that the company’s gas stations sold in the region.
The other half has to be shipped from the Gulf of Mexico.
Chevron, which operates 20,805 gas stations in 40 states and the District of Columbia, is selling assets to help pare down the $13.3-billion debt that it took on to buy Gulf Oil last year. The company already has sold about $2 billion worth of assets.
The 65-year-old refinery in Philadelphia and some of the gas stations in the East came to Chevron in the Gulf acquisition.
Price said Chevron also may consider the sale of other refining and marketing assets.
He said the company is “looking at the rest of the system.” But, he added, it wasn’t likely that Chevron would offer any other large packages.
A sale of the Eastern and Puerto Rican properties would be in line with an industrywide trend to sell off marketing and refining assets in what has become a marginal business.
Chevron already has closed a refinery in the Bahamas and part of its refinery in Perth Amboy, N.J.
Four months ago, Los Angeles-based Atlantic Richfield announced plans to withdraw from the East. It has since sold 976 stations in nine states and the District of Columbia, as well as a refinery in Philadelphia.
Arco said the Eastern market was too competitive and too far from its chief source of crude oil in Alaska.
