Conoco to Shutter Refinery After Fire

Monday, August 2, 2010 @ 05:08 PM gHale


After a May 1 fire at its Wilhelmshaven, Germany, refinery, ConocoPhillips may keep the plant closed and record $1.1 billion in second-quarter costs to reflect a drop in the value of the plant.
Houston-based ConocoPhillips said late last week it was scrapping its plans to upgrade the refinery. Instead, the company said it may sell the 260,000-barrel-a-day plant or convert it to a fuel terminal.
ConocoPhillips doesn’t plan to resume making fuel at the plant because of economic conditions, company spokesman Bill Stephens said. The $1.1 billion charge reflects the difference between the refinery’s market value and its value on the company’s books, he said.
After refining profit margins narrowed throughout the industry, the company decided to cut investment in downstream operations.
“This move is consistent with our stated strategy of maintaining capital discipline and reducing our downstream portfolio over time,” said Willie Chiang, senior vice president of refining, marketing and transportation.
The company bought the Wilhelmshaven plant from Louis Dreyfus Energy Holdings Ltd. in 2005 for price they would not disclose.
ConocoPhillips joins refiners including Royal Dutch Shell PLC, Total SA, and Petroplus Holdings AG in closing or converting plants amid declining European demand for fuels such as gasoline and diesel.
The $1.1 billion estimate for the plant write-off is after tax, ConocoPhillips said. The company’s earnings reports should come out this week.



One Response to “Conoco to Shutter Refinery After Fire”

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