PBF to Buy Exxon Refinery for $537.5 Million -- Update

By Lynn Cook 

PBF Energy Inc. said it will buy a large refinery in southern California from Exxon Mobil Corp. for $537.5 million, plus working capital valued at closing.

The deal is significant because the 155,000-barrel-a-day refinery in Torrance, a suburb south of Los Angeles, has been shut down since early 2015 when a fire destroyed a unit critical to making gasoline. Once the refinery stopped making fuel, prices at the pump in the state soared.

It's difficult to import enough fuel to satisfy California's gasoline needs, because the state's environmental regulations are more stringent than the rest of the U.S., and the world.

PBF said the refinery will be fixed and reopened before the deal is closed in the second quarter of 2016, subject to customary closing conditions and regulatory approvals.

California's Division of Occupational Safety and Health, the state's workplace safety regulator, has proposed a $566,000 fine against Exxon for failing to prevent the Feb. 18 explosion at the plant that injured four workers. The refinery's fluid catalytic cracker--a key gasoline-making unit that helps reduce air pollution--has been shut down since that fire.

Fuel prices on the U.S. west coast have been higher than the rest of the country this year, according to AAA's Daily Fuel Gauge Report. Closed and partially shut down fuel-making plants in the state have helped push up fuel prices in the region, though in recent weeks they have started to drift lower.

California's average gasoline price was $2.97 a gallon on Wednesday, down five cents from last week, AAA data show. Only Alaska drivers pay more, with an average $2.98 a gallon. The national average gasoline price is 23% lower than California's at $2.2785 a gallon.

Write to Lynn Cook at [e-mail]

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September 30, 2015 18:12 ET (22:12 GMT)

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