Valero to Sell Benicia Refinery

Valero Energy Corp. said Monday it has agreed to sell a refinery and dozens of gas stations in Northern California as part of negotiations with the Federal Trade Commission over its proposed takeover of rival refiner Ultramar Diamond Shamrock Corp.

The proposed consent decree, reached with FTC staff, would require Valero to part with the Golden Eagle refinery in Benicia and 70 gas stations, all now owned by UDS, to proceed with the $4-billion buyout.

Terms of the consent decree must be approved by the five FTC commissioners before the deal is considered final.

Combining Valero and UDS, both based in San Antonio, Texas, would create one of the nation’s largest refining companies, with a capacity of nearly 2 million barrels a day from a dozen refineries and roughly 5,000 service stations.

Valero had pushed to keep both of the UDS refineries in California, the nation’s most lucrative gasoline market. Valero already owns a 165,000-barrel-per-day refinery in the San Francisco Bay Area.

The FTC wanted Golden Eagle sold to promote refinery competition in the area, with the gas stations made part of the deal to ensure a marketing outlet for Golden Eagle, which has a capacity of 168,000 barrels per day.