The Valero-Marsden Point Fit – Refinery In Takeover Sights
July 29th, 2009
• NZ’s only oil refinery in play.
• Just as the “strategic asset” test is axed.
• Strong strategic fit for potential bidder.
The Marsden Point oil refinery ticks all the right boxes for Valero Corporation, the NYSE-listed Fortune 500 company reported to be looking at a stake in or possibly takeover of the NZX-listed NZ Refining Co. Ltd. With Shell openly touting its 17% shareholding in NZ’s world-class and only oil refinery and Exxon Mobil known to be keen to quit its 19% stake, a rare opportunity to buy a strategic 36% of the plant may appeal to Valero, which is the largest refiner in North America.
73% of NZ Refining shares are owned by the four oil majors, (including BP and Chevron/Caltex). Valero has ambitions to diversify into foreign assets, and was pipped at the post by a Russian refiner earlier this year for 45% of a large refinery in the Netherlands, which would have given Valero exposure to the world’s largest distillates market.
Marsden Point is clearly not in the same category. However, NZ Energy & Environment Business Week inquiries with Valero established its four key criteria for a foreign refinery are it must: refine more than 100,000 barrels a day; be capable of “complex” refining across a range of heavy and light crude oils; be capable of upgrading; and have water access. An upgrade under way at present will take refining capacity to 120,000 barrels a day from September, there is further room for expansion at the Whangarei Heads port site for the refinery, and it is a “complex” refining facility, so Valero’s key criteria appear well-met. Valero’s spokesman Bill Day says “we would be open to acquisitions and look for opportunities where they present themselves around the world. We are very particular about our investments. We have certain criteria.”
None of this confirms a Valero bid, but Day confirmed the Asia-Pacific region is of interest while declining to comment on speculation over an NZ Refining Co bid. It remains unclear whether other major shareholders have been approached or would be willing to sell their shareholdings to any bidder, let alone Valero. Finance Minister Bill English was unaware of the potential bid when approached for comment, but says the most important policy issue for the refinery is “ensuring it does not abuse its monopoly position,” rather than who owns it.
The speculation coincides with English’s announcement the Govt intends scrapping the “strategic asset” test Labour introduced when it blocked the sale of a strategic stake in Auckland International Airport Ltd to Canadian investors. Any bidder for a stake in the Marsden Pt refinery will still have to go through the full Overseas Investment Office screening process, including Ministerial approval, English notes. And unlike Auckland Airport, the refinery is already majority foreign-owned.
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