MOSCOW (MRC) -- At least three firms including Saudi Arabian state oil giant Saudi Aramco have bid over USD1 B for LyondellBasell's refinery in Houston, according to four people familiar with the process, reported Reuters.
The Saudi firm was initially seen as the front-runner among bidders that also included Valero Energy Corp. and Suncor Inc., sources said, but added it is unclear if that is still the case.
Aramco has bid USD1.5 B for the plant, after an initial bid of USD1.2 B, three sources said.
Aramco may be looking to boost its US refining capability to compensate for capacity that it is losing as it breaks up a JV with Royal Dutch Shell.
Canadian crude producer Suncor also bid around USD1.2 B, and San Antonio-based refiner Valero bid USD900 MM, three of the people said.
Lyondell has not stated publicly what it considers the plant to be worth, but a source familiar with negotiations said that the refinery could fetch USD2 B.
"As we stated on August 25, we are continuing to explore all options," said Michael Waldron, vice president of corporate communications for LyondellBasell. He said the company would not "comment further on market rumors or speculation."
Recent US refinery sales have fetched about USD5,000/bbl of capacity, which would value the plant at about USD1.3 B. Variables such as a plant's operating income and its ability to process heavy grades of crude help determine its value.
The cost of renewable fuel credits may affect the price of the plant, because Lyondell will need to spend about USD200 MM this year on the credits, known as RINs, said Matthew Blair, an equity analyst with Tudor, Pickering and Holt. That could cap the price bidders are willing to pay, he added.
In August, Reuters reported that Lyondell retained Bank of America Merrill Lynch to advise on the potential sale of the 264 Mbpd refinery.
The plant imports South American and Mexican grades of crude oil, so it could offer Saudi Arabia a new outlet for its crude.
The US currently imports about 1 MMbbl of Saudi crude a day. Motiva processed 162 Mbpd of Saudi crude in July, the most recent month for which data is available.
The Motiva joint venture is currently being dissolved. After the split, Aramco may seek additional outlets for its crude besides the one Motiva plant it will retain in Port Arthur, Texas.
Valero operates refineries close to the Lyondell plant in Houston and Texas City. Suncor, which produces crude in Alberta's oil sands, could also be seeking additional outlets for its crude.
We remind that, as MRC wrote before, LyondellBasell completed the previously announced acquisition of the polypropylene (PP) compounding assets of Zylog Plastalloys Pvt. Ltd. (Zylog) in India. The company entered into a definitive agreement to acquire Zylog's PP compounding assets in November 2015.
LyondellBasell is one of the world's largest plastics, chemical and refining companies and a member of the S&P 500. LyondellBasell manufactures products at 57 sites in 18 countries. LyondellBasell products and technologies are used to make items that improve the quality of life for people around the world including packaging, electronics, automotive parts, home furnishings, construction materials and biofuels. Hostacom and Hifax are trademarks owned by LyondellBasell. The manufacturing facilities in India are owned and operated by Basell Polyolefins India Pvt. Ltd., a wholly-owned subsidiary of LyondellBasell.
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