Vertex Energy Buys Alabama Refinery from Shell

By Kimberly Chin

Vertex Energy Inc. on Wednesday agreed to acquire the Mobile, Ala., refinery from a subsidiary of Royal Dutch Shell PLC for $75 million, part of the company's ambitions to become a pure-play producer of renewable and conventional products.

The specialty refiner will become the sole owner and operator of the Alabama refinery, Vertex said.

After the deal closes, Vertex expects to start an $85 million renewable diesel fuel capital project that will convert the refinery's hydrocracking unit to renewable diesel fuel production by the end of 2022, the company said. As such, Vertex projects the refinery will generate at least $3 billion in sales and $400 million in gross profit annually, beginning in 2023, Vertex said.

"Not only will this project fundamentally transform the profitability profile of the Mobile refinery, it also positions Vertex to further its objective of developing high-purity refined products and alternative feedstocks that support the global transition toward low-carbon energy alternatives," said Chief Executive and President Benjamin Cowart in prepared remarks.

Vertex will also enter into a multi-year crude supply and product offtake contract with several companies, including Shell and Bunker Holding. Both companies will buy 100% of the refinery's conventional fuels production, the company said.

This follows a Dutch court ruling on Wednesday that found Shell must curb its carbon emissions by 45% by 2030, compared with 2019 levels. The first-of-its-kind ruling holds the energy company partially responsible for climate change, adding fresh pressure on oil-and-gas companies over their carbon emissions.

Idemitsu Apollo Corp., a subsidiary of Idemitsu Kosan Co. Ltd., will buy 100% of the refinery's renewable diesel fuel production, Vertex said.

Vertex will finance the transaction and the renewable diesel capital project using a $125 million debt facility, cash through potential asset divestitures and potentially the sale of shares, the company said.

Vertex will also acquire the refinery's existing hydrocarbon inventory through funding provided by Bunker, it said.

The company expects the deal to close in the fourth quarter.

Write to Kimberly Chin at [e-mail]

(END) Dow Jones Newswires

May 26, 2021 18:22 ET (22:22 GMT)

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