PBF Holding on Friday completed its acquisition of Valero Energys Paulsboro, N.J., refinery, including its base oil plant, in a $707 million deal that included $340 million for the refinery.
According to Valero, its total proceeds also included $367 million for net working capital, inventories, and other adjustments. Consideration received by Valero at closing consisted of $547 million in cash and a note for $160 million from PBF Holding.
The refinerys net sales price was adjusted from the $360 million announced in September mainly due to changes in crude oil supply economic assumptions, Valero stated.
The base oil plant at the refinery, which is called Paulsboro Refining Co., has about 11,000 barrels per day of API Group I capacity.
PBF said it added 402 new employees as a result of the acquisition. In September, a Valero spokesman said the Paulsboro refinery had about 450 employees.
Yvonne Schappell is marketing manager, lubes, for Paulsboro Refining Co. She previously was business manager for paraffinic base oils, extracts, and petcoke, for Valero Marketing and Supply Co.
All of Valeros existing contracts with customers for base oil from the Paulsboro plant were signed over to the new owner and will remain in effect, she confirmed.
We are very much interested in continuing to grow our lube sales, Schappell told Lube Report. This company is very dedicated to the lubes business. Its extremely important to this refinery. And so we want to definitely give it the amount of attention it deserves.
She emphasized Paulsboro Refining will be growing its sales organization. We are interviewing some excellent candidates and hope to have our new organization in place by early January, Schappell noted.
We plan on optimizing this plant with our Delaware City operation to ensure that both plants remain highly competitive in the marketplace, PBF Chairman Thomas D. OMalley stated.
PBF also completed a commercial arrangement with Statoil Marketing and Trading, which will provide crude oil and feedstocks to the refinery on a real time basis.
Paulsboro is a high-conversion heavy crude oil refinery. According to PBF, major process units include a delayed coking unit, a fluid catalytic cracking unit, hydrotreating units, a reformer, and an alkylation unit.
Valero Energy had acquired the Paulsboro refinery from Mobil in 1998. When the sale to PBF was announced in September, Valero cited a challenging refining environment and very competitive market on the U.S. East Coast, with low refining margins, high costs and a substantial existing product inventory.
Valero acquired the Delaware City, Del., fuels refinery along with three others from Premcor in 2005. It found the Delaware operation could support base oil production at Paulsboro if the two locations, about 35 miles apart, shared crude shipping and terminaling agreements.
In early and mid-2006, Valero had wavered on keeping Paulsboros lube unit open, but the Delaware City deal cemented its resolve. Citing increased flexibility in crude supply, it said the base oil operation would continue.