US: Marathon to become top refinery with US$23b Andeavor buy

Marathon Petroleum agreed to buy rival Andeavor for more than US$23 billion in the largest-ever tie-up between US refiners, giving the combined company a nationwide presence and increased access to growing export markets.

The deal gives Marathon more exposure to the booming US shale oil sector, thanks to Andeavor’s existing logistics and terminal operations in Texas and North Dakota shale regions. Rising output from west Texas’s Permian has driven US crude production to an all-time record above 10.5 million barrels per day (bpd).

“The combination of the two companies allows us to go after and find ways to create a bigger presence in the Permian,” said Marathon Chief Executive Gary Heminger, who will lead the combined companies.

The company would beat Valero Energy to become the largest US refiner, with the capacity to process 3.1 million bpd of crude oil into gasoline, diesel and other fuels.

The deal also gives Marathon a line into fast-growing Mexican fuel markets. Andeavor is expanding its network of filling stations in the country. Mexico’s dilapidated refineries cannot meet the growing population’s demand for gasoline and other products. US fuel exports to Mexico had risen to 1.4 million bpd as of January, up more than 85%t from two years ago.

Full Content: Wall Street Journal

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