Watch CBSN Live

Valero Energy in Talks to Sell Delaware Refinery to Private Equity-Backed PBF

In the dark cloud surrounding the refining business, there is a bit of good news for one of the largest U.S. companies in the industry. Valero Energy Corp. is in advanced talks with PBF Investments to sell its Delaware City refinery. Valero closed its Delaware City refinery in November after attempts to find a buyer failed and shrinking margins and weak demand made it too expensive to keep the 210,000 barrel-a-day facility open.

It's unclear if PBF will restart the refinery. But it's likely, considering the man and money behind the deal. PBF is the investment arm of Petroplus Holdings, a major independent refiner and wholesaler of petroleum products in Europe. Tom O'Malley, chairman of Petroplus, formed PBF Partners with backing from private equity firms Blackstone Group and First Reserve Corp. in March 2008.

The three firms have committed $666 million to PBF to pursue acquisitions of crude oil refineries in the United States. O'Malley, who is CEO of the PBF partnership, is well-known in the refining industry. He ran Premcor Inc., a Blackstone portfolio company which was sold to Valero Energy in 2005, the WSJ noted in a 2008 article. In short, O'Malley is very familiar with Valero and its assets.

Valero has agreed it will not remove any equipment while negotiations are under way, according to a statement by the San Antonio-based refiner. There is no specific timetable for when negotiations might be completed.

Valero Chairman and CEO Bill Klesse indicated the company has worked closely with Gov. Markell in pushing the negotiations forward.

In other Valero news today: A tax dispute between the government of Aruba and Valeroover its idled refinery may soon be resolved, according to a Reuters report. The tax dispute has put the brakes on Valero's attempt to sell the refinery.

See additional BNET Energy coverage of Valero Energy:

View CBS News In