Marathon Petroleum is nearing a deal for the sale of several refineries to CVR Energy, with the sale expected to be worth $4 billion, the Wall Street Journal has reported, citing unnamed sources. The deal could be announced later today.
The refining sector has become the star of the oil industry this year as the wars in the Persian Gulf and Russia-Ukraine have severely crippled global fuel supply, prompting refiners outside the war zones to boost their output. The market situation has driven a surge in refining margins to all-time highs, making refineries an attractive takeover target for buyers with the money.
Refining margins for U.S. Gulf Coast operators hit an all-time high of $72 per barrel in September, driven by the Middle East and Russia refinery disruption and the consequent fuel shortages. Margins are off that peak since then but still significantly higher than they were a year ago.
According to the WSJ report, CVR Energy, which is 71% owned by Carl Icahn, is the seventh-largest publicly traded refiner in the United States. Still, with its market value of around $6 billion, it is significantly smaller than Marathon, which has a market value of $125 billion. It is, however, ambitious—and it is not the only one.
The Wall Street Journal recalled that Valero had just snapped up an idled refinery in Houston and now plans to restart it at a daily rate of 165,000 barrels, while Exxon and Chevron are directing investments into their refining business and ramping up production at their existing refineries.
The ongoing wars have demonstrated that the world has a shortage of refineries, as many facilities closed or were transformed into biofuel plants amid the shift to alternative energy sources. Europe is currently struggling to secure enough imported fuels because it has closed about a quarter of its refineries over the past two decades.
By Irina Slav for Oilprice.com
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