Chevron Seeking Buyer for Kapolei Oil Refinery in Hawaii

Chevron Seeking Buyer for Kapolei Oil Refinery in Hawaii

Chevron Corp. (CVX), the world’s third-largest oil producer by market value, is seeking a buyer for one of its smallest refineries, the Kapolei plant on the Hawaiian island of Oahu.

The sale of the the 54,000-barrel-a-day Kapolei complex is part of a larger plan to divest $10 billion worth of assets over the next three years. Closing the plant would leave Hawaii with a single 93,500-barrel-a-day refinery, which Par Petroleum Corp. (PARR) bought from Tesoro Corp. (TSO) last year.

Chevron shares were up $1.03, or 0.8 percent, at $125.17 at 2:42 p.m. New York time. Par Petroleum Corp., which operates the only other plant in Hawaii, gained 6 percent to $16.58.

Chevron “has decided to engage an investment banking firm to identify potential parties interested in the purchase of our assets in Hawaii,” Braden Reddall, a spokesman at Chevron’s headquarters in San Ramon, California, said by telephone late yesterday. “No decision has been made at this time other than to determine the level of interest of potential buyers.”

Deutsche Bank has been hired by Chevron, two people with direct knowledge of the situation said, while asking not to be identified because the information isn’t public.

Al Chee, a Chevron spokesman at the refinery, declined by telephone to comment. Ari Cohen, a spokesman for Deutsche Bank in New York, declined by e-mail to comment.

Fourth-Smallest

Chevron previously considered turning the Kapolei complex into a terminal. After a review three years ago, the company decided to continue to run it as a refinery. It’s Chevron’s fourth-smallest by capacity, data compiled by Bloomberg show.

Selling the refinery in 2011 was “not as competitive” as improving its value, Michael Wirth, Chevron’s executive vice president of downstream and chemicals, said in a conference call with analysts at the time of the review.

“Everybody realizes that’s a small refinery,” he said. “It’s not an especially complex refinery. It’s got a somewhat isolated and finite market. And so we’re really in the space of optimizing every dimension of performance there.”

The refinery ran 39,000 barrels a day in 2013, down from 46,000 in 2012, the company said in its 10-K annual report. Last year, the plant imported 87 percent of its oil from Indonesia, Thailand and Vietnam, Energy Information Administration data show.

Earlier this month, Chevron extended a supply contract with Hawaiian Electric Co. Inc. for low-sulfur fuel. Meanwhile, Par Petroleum said it was losing its contracts with the utility in December and was “aggressively pursuing other outlets.”

Exxon Mobil Corp. and Royal Dutch Shell Plc are the two largest oil producers.