Valero CEO: Not In Talks With Reliance On Distressed Assets

Valero Energy Corp. (VLO) Chief Executive Bill Klesse said Wednesday his company isn't in talks with India's Reliance Industries (500325.BY) to sell three of its distressed assets.

Speaking to reporters on the sidelines of a U.S. Senate committee hearing, Klesse wouldn't, however, deny press reports that his firm was talking with China's PetroChina (0857.HK) for one of those assets, its Aruba refinery.

Valero has made known it's considering - as one alternative - selling its Aruba, Delaware City and Paulsboro refineries because they're losing money.

"Those three refineries have been a very negative operation for us this year," Klesse said.

"For Valero, I'm trying to still rationalize my portfolio...we're looking to strategic alternatives," he said.

"I do know the Reliance people, but I haven't talked to them recently," he said. "I have not talked to Reliance on any of those" refineries," he added.

At Delaware City, the company has shut down one of its gassifiers that was losing money and a coker unit. "We're still investing there because we're going to have a two-month turnaround there at the refinery to fix the cat cracker," said. That planned shutdown will start in November and last to mid-January.

At Paulsboro, the company is trying to get its costs down.

More broadly, Klesse said his company was "hunkered down, we're trying to balance our cash flow."

Supply in the industry is far outstripping demand in the current recession.

By Ian Talley, Dow Jones Newswires, 202-862-9285; [e-mail]