The price includes $180 million in cash, and PBF will enter into a note with Valero for the other $180 million. Greenwich, Conn.-based PBF will also acquire the facilitys working capital and hydrocarbon inventory, currently valued at $275 million, at closing. Two PBF subsidiaries acquired Valeros Delaware City, Del., refinery and terminal operation assets for $220 million in June.

The Paulsboro plant has 11,000 barrels per day of API Group I capacity and 500 b/d of Group II capacity.

Gayda said PBF has not yet determined what brand name the base oil product will have once the Paulsboro refinery acquisition closes. We will continue to sell those products at that location and be an active marketer, he asserted.

PBF stated it would retain substantially all of the Paulsboro refinerys employees. There are always a few changes in any kind of transaction, and well look at those, Gayda observed. But in essence, virtually all the employees will continue after the transaction closes.

The Paulsboro refinery has about 450 employees, according to Valero spokesman Bill Day.

We have been talking about the difficulties on the East Coast, and the challenging refining environment that is there, Valeros Day informed Lube Report. Although we still plan to serve our customers after this transaction closes, we have been talking for some time about low refining margins and high costs, both with labor and regulatory affairs that add cost.

Another issue was the substantial product inventory that already exists on the U.S. East Coast, Day pointed out, especially with the ease in which refined products arrive from Europe. So its a very competitive market, and challenging, especially in a recession, Day said.

PBFs principal owners are independent European refiner Petroplus Holdings, investment and advisory firm The Blackstone Group, and private equity firm First Reserve. On Sunday, Petroplus said it reached agreement with Blackstone and First Reserve to sell its 32.62 percent share of PBF in an agreement expected to close in the fourth quarter. Petroplus operates a base oil plant in Petit-Couronne, France, with 6,300 b/d Group I and 1,000 b/d Group II capacity.

Petroplus has been an active and supportive partner, but theyve made the determination – I think independent of this refinery acquisition – that it would be better for them to focus their resources on their core markets in Europe, PBFs Gayda explained. I suspect they will sell their [PBF] ownership interest prior to our acquisition of the Valero refinery.

The acquisition of Paulsboro is an important milestone for PBF, and we look forward to making additional future investments to fund PBF as management executes an acquisition-based growth strategy, said David Foley, senior managing director for Blackstone, of New York City.

In February 2010, Valero Energy said it was considering selling the Paulsboro refinery, which the company acquired from Mobil in 1998.

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.