HOUSTON, Aug 24 (Reuters) - The fourth largest U.S. refiner Phillips 66 on Tuesday said it has put the smaller of its two Louisiana refineries up for sale amid continued losses and an uncertain future for motor fuels.
The company is holding talks with a potential buyer on the sale of its 255,600 barrel-per-day (bpd) Alliance refinery in Bell Chasse, Louisiana, according to two people familiar with the matter. The identity of the potential buyer could not immediately be learned.
U.S. refiners have closed or sold oil processing plants as the pandemic slashed demand for gasoline and jet fuel and generated losses for the industry. Top auto makers are accelerating their shift to electric vehicles, signaling tougher times ahead.
"The U.S. refining business in the future is going to be smaller, not bigger," Chief Executive Officer Gregory Garland said earlier this month while laying out plans to expand its supply of components for electric car batteries and hydrogen and lower-carbon fuels.
Garland predicted demand for gasoline in the U.S. and Europe was at or near its peak. The Houston-based refiner posted a second quarter profit on strong chemical demand, but work-from-home policies and sagging fuel margins left its refining business in the red.
Falling demand amid the pandemic has forced the closure of five U.S. refineries and cut oil processing capacity by 4.5% to 18.13 million barrels per day (bpd), according to the U.S. Energy Information Administration.
The 50-year-old Alliance refinery is located 20 miles (32 km) south of New Orleans and along the Mississippi River, where tankers dock to deliver crude oil.
"We expect the marketing process to continue over the next several months," said Phillips 66 spokesman Bernardo Fallas. "We will make an announcement at the appropriate time if and when an agreement has been reached with a buyer."
The market for refineries has become active this year with Royal Dutch Shell agreeing to sell its controlling interest in a Texas refinery to Petroleos Mexicanos and a Washington state refinery to HollyFrontier.
HollyFrontier agreed to pay $350 million for Shell's 145,000-bpd Anacortes, Washington refinery plant and an additional amount for on-hand inventory when the sale closes later this year. HollyFrontier estimated the inventory will cost between $150 million and $180 million.
The price paid for the Anacortes refinery is consistent with what was being paid prior to the COVID-19 pandemic, which hit motor fuel demand hard in 2020. That would put the value of a refinery at about $2,400 a barrel.
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