Independent refiner PBF Energy on June 11 announced its plan to acquire Shell Oil’s Martinez, CA, refinery for about $1 billion; the deal is expected to close by the end of 2019. The purchase will give PBF its sixth U.S. refinery and add 157 Mb/d to the company’s existing 865-Mb/d refining portfolio, pushing its total capacity past 1 MMb/d. Post-acquisition, PBF will retain overall fourth place in the U.S. market, behind leaders Marathon Petroleum, with 3 MMb/d; Valero, with 2.6 MMb/d; and Phillips 66, with 1.9 MMb/d. With the exception of its 173-Mb/d Toledo, OH, plant, PBF’s refineries are equipped with cokers that extract value from the heaviest sour crudes. As such, the Martinez acquisition extends the company’s long-term bet that heavy crude refining margins will exceed those of simpler refineries processing light sweet grades, even as U.S. production of the latter soars. Today, we examine prospects for the Martinez refinery and the sweet/sour spread.
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