Sunoco Inc (SUN.N) and private equity firm Carlyle Group LP (CG.O) have reached an agreement to keep the largest refinery on the East Coast in operation, sources familiar with the situation said on Monday.
Terms of the deal will be announced at a news briefing later Monday morning, the sources said. The two companies have been in exclusive talks since April over forming a venture that would save the 335,000-barrel-per-day (BPD) Philadelphia plant after Sunoco said it would have to sell or close it by August.
Carlyle would become the second white knight to rescue an imperiled refinery on the U.S. East Coast, where diminishing demand, high crude costs and tough foreign competition have hurt profit margins for years.
Earlier this year, Delta Air Lines Inc (DAL.N) bought the 185,000-BPD Trainer refinery, located several miles away, from Phillips 66 (PSX.N).
An agreement between Sunoco and Carlyle would help temper fears that fuel supplies could run short during the peak summer period - driving up prices and stirring concern at a local and national level.
It would also effectively mark Sunoco's exit from the refining sector, ending the company's over century-long tradition in the region.
Sunoco and Carlyle said in a release to reporters earlier on Monday that they would hold a briefing later in the day, including include speakers from the two companies as well as Pennsylvania Representative Bob Brady, Pennsylvania Governor Tom Corbett and Leo Gerard, International President of the United Steelworkers Union.
Last Wednesday, the members of United Steelworkers Union 10-1 and the two companies tentatively reached a labor agreement. The USW workers at the plant were expected to ratify the contract on Monday night, removing a hurdle to the deal, going forward. Source had said the final major obstacle was securing financial support from local and state government.
In April, when the companies announced their talks, they said Sunoco would contribute the facilities and Carlyle would operate the plant -- the longest continuously operating refinery in the United States and by far the largest in the region.
Oil traders are closely watching the fate of the refinery, one of three in a 12-mile radius near Philadelphia that had been threatened with closure as the high cost of imported crude the plants traditionally buy and weak regional demand battered profits.
Sunoco has already closed the 178,000-bpd plant in Marcus Hook, several miles away, while Trainer has been saved.
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