Valero has long sought to buy a plant in Europe but was shut out of a deal to buy Total’s (TOTF.PA) stake in a Dutch refinery in 2009 when Russia’s Lukoil stepped in.
Chevron put its 220,000 barrels-per-day Pembroke refinery up for sale last year to lower its exposure to the refining business.
News of the pending deal for the refinery had leaked out in recent days, although the financial terms announced were lower than the $2 billion that sources had said the transaction would be worth.
The deal, in which Valero will pay $480 million for the plant and another $250 million for the marketing and logistics assets in the region, is expected to close in the third quarter of 2011, pending regulatory approvals.
Those marketing and logistics assets include more than 1,000 Texaco-branded wholesale sites, stakes in four major product pipelines and 11 terminals.
The purchase will add 26 cents to Valero’s earnings per share based on 2010 market prices and 30 cents per share based on 2011 forward prices, the company said on Friday in a statement announcing the purchase.
Valero said the price for the plant was $185 per barrel, a discount of 60 percent to Valero’s current refining value.
Chevron has sold downstream operations, which include refining, marketing and retail assets, in more than 20 countries in recent months, and it is currently looking for buyers for operations in the Caribbean and some Central America markets.
Weak European margins over the past two years forced refiners to cut runs, sell refineries or convert them into storage.
European refining margins came under further pressure as Brent crude prices rose to 2-1/2 year highs of $119.79 a barrel amid the escalating violence in Libya in late February, crushing the profit refiners can make from processing feedstock crude into refined products.
Complex refining margins across the barrel in northern Europe fell to $2.25 a barrel in February, from an average of around $3.62 a barrel over the past year, Reuters data shows.
