Cenovus Energy Inc. has signed a US$300 million contract. This is another step in the company’s long-term strategy to integrate its heavy oil production and refining capabilities.
The Calgary-based oil company announced Monday that it has reached an agreement to purchase the remaining 50% stake in Ohio’s BP-Husky Toledo refinery with British energy giant BP. The companies also have a multi-year product supply agreement.
Cenovus owns the remaining 50% of the Toledo refinery since its merger with Husky Energy in 2021.
If the transaction closes by the end of the year, Cenovus will take over the operations of the refinery currently operated by BP. His 580+ employees at the Toledo refinery will become Cenovus employees.
“This refinery is a strategic addition to our downstream business,” said Keith Chiasson, Executive Vice President of Downstream at Cenovus, in a release.
“It has provided economic opportunities and important energy products to the people of Ohio and surrounding areas for decades. looking forward to it.”
The BP-Husky Toledo refinery is capable of processing up to 160,000 barrels of crude oil daily, supplying gasoline, diesel, jet fuel, propane, asphalt and other products to the Midwestern United States.
The Toledo refinery recently completed a major five-year turnaround, Cenovus said. Cenovus said taking full ownership of the facility provides an opportunity to optimize the fuel oil value chain by integrating it with upstream assets.
The transaction brings Cenovus’ total refining capacity to 740,000 barrels per day and also provides the long-term potential to connect the Toledo refinery to Cenovus’ U.S. refining network, the company said.
“This acquisition is consistent with[Cenobus’]strategy and has been completed at an attractive price,” Scotiabank analyst Jason Bouvier said in a memo to clients. “The deal also includes a supply contract for BP retailers.”
Monday’s announcement follows another previously announced deal between Cenovus and BP. In June, BP announced the sale of its interest in the Sunrise Oil Sands Project in Alberta to Cenovas and acquisition of Cenovas’ interest in the Bay du Nord Project off Newfoundland and Labrador.
Following the completion of that transaction, also scheduled for 2022, the UK energy company will no longer be interested in oil sands production and will shift its focus to Canada’s future offshore growth potential.