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Phillips 66 refinery sale offers test of investors views on pace of transition to electric vehicles

September 01/2021

MOSCOW (MRC) -- US refiner Phillips 66's decision to market a Louisiana oil processing plant offers a key test of investors' views on the pace of the transition to electric vehicles, reported Reuters with reference to refinery industry experts.

Phillips 66, the fourth largest US refiner, on Tuesday said it has put its 255,600 barrel per day (bpd) Alliance plant on the market, citing "the evolving energy landscape." The 50-year-old plant makes gasoline, diesel and jet fuel for US and Latin American markets.

Reuters on Tuesday reported Phillips 66 is in talks with a potential buyer. A spokesman declined to comment, calling any talks confidential.

Analysts said potential buyers may be willing to make a contrarian bet on motor fuel demand, pointing to private equity firms and rival Gulf Coast refiners Motiva Enterprises, Valero Energy Corp and PBF Energy.

Motiva, Valero and PBF did not reply to messages asking about interest in the Alliance refinery.

"While there are a lot of uncertainties out there - mainly regulatory in terms of climate change or COVID mandates - the economic dust has settled so buyers are likely to get more serious again," said Garfield Miller, chief executive of investment banker Aegis Energy Advisors.

A private equity firm might consider buying Alliance as the anchor for a move into motor fuel, seeing Phillips 66 and other oil companies exit as an opportunity, he said.

As MRC informed previously, Worley has been recently awarded a front-end engineering services contract by Phillips 66 to convert its San Francisco refinery in Rodeo, California, USA into a renewable fuels-manufacturing facility. Under the contract, Worley will provide front-end engineering design services for the facility, which will be executed by Worleys North America West team with support from Worleys Global Integrated Delivery team.

Besides, in October 2020, Phillips 66 said it plans to reconfigure its refinery in Rodeo, California to produce renewable fuels from used cooking oil, fats, greases and soybean oils.

We remind that US-based Phillips 66 remains open to developing another ethane cracker for its Chevron Phillips Chemical (CP Chem) joint venture, the refiner's CEO said in March 2018.

Ethylene and propylene are the main feedstocks for the production of polyethylene (PE) and polypropylene (PP), respectively.

According to MRC's ScanPlast report, Russia's estimated PE consumption totalled 1,176,860 tonnes in the first half of 2021, up by 5% year on year. Shipments of exclusively low density polyethylene (LDPE) decreased. At the same time, PP shipments to the Russian market were 727,160 tonnes in the first six months of 2021, up by 31% year on year. Supply of homopolymer PP and block-copolymers of propylene (PP block copolymers) increased. Supply of statistical copolymers of propylene (PP random copolymers) subsided.

Phillips 66 is a diversified energy manufacturing and logistics company. With a portfolio of Midstream, Chemicals, Refining, and Marketing and Specialties businesses, the company processes, transports, stores and markets fuels and products globally. Phillips 66 Partners, the companys master limited partnership, is integral to the portfolio. Headquartered in Houston, the company has 14,300 employees committed to safety and operating excellence. Phillips 66 had USD55 billion of assets as of Dec. 31, 2020.
Author:Margaret Volkova
Tags:crude and gaz condensate, propylene, ethylene, petrochemistry, recikling, Chevron Phillips, Motiva Enterprises, Phillips 66, Valero, USA.
Category:General News
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