2 Refiners on Short List for Exxon Assets
Two independent Texas oil refiners--Ultramar Diamond Shamrock Corp. and Valero Energy Corp.--are finalists in bidding for an Exxon refinery and gas stations in California that must be unloaded as part of Exxon Corp.’s recent merger with Mobil Corp., the companies said Wednesday.
The Federal Trade Commission approved the $80-billion merger in December, but only after requiring record concessions from Exxon Mobil Corp. to boost competition in various markets. In California, the company must sell the Exxon refinery in Northern California and all of Exxon’s 360 gasoline stations.
Regulators and politicians are eager to bring new competitors to the California gasoline market, where six companies sell more than 90% of fuel. Because relatively few refineries make the clean-burning gasoline required by California’s antipollution regulations, any disruptions at those refineries send gasoline prices soaring.
Officials at Ultramar Diamond Shamrock and Valero Energy, both based in San Antonio, did not reveal how much Exxon Mobil is demanding for the assets, but noted that the Irving, Texas-based oil company hopes to make a decision by the end of the month. Any sale must be approved by the FTC and California Atty. Gen. Bill Lockyer.
Ultramar Diamond Shamrock, with nearly $14 billion in annual revenue, operates a refinery in Wilmington with the capacity to refine 100,000 barrels a day of crude oil.
Of the company’s 5,000 gasoline stations, about 350 operate in California under the brand names Diamond Shamrock, Ultramar, Beacon and Total. Ultramar’s six refineries in the United States and Canada have a combined capacity of 645,000 barrels a day.
Ultramar Diamond Shamrock accounted for nearly 7% of the gasoline sold in California in 1998, placing it seventh among marketers, according to a report prepared late last year for Lockyer, who is investigating gasoline pricing practices. Exxon, No. 6, sold nearly 9% of the state’s gasoline. The two operations combined would rank fourth, after Atlantic Richfield Co., Chevron Corp. and Tosco Corp., which markets under the 76 brand.
Valero, with nearly $8 billion in revenue, owns five refineries in Texas, Louisiana and New Jersey, with a combined capacity of 785,000 barrels a day. The company has no retail gas stations.
