South Korea's state-run Korea National Oil Corp (KNOC) has agreed to sell its money-losing Canadian oil refining subsidiary to a New-York based commodities merchant bank later this year, its Canadian unit said Friday.
Harvest Operations, KNOC's energy affiliate in Canada, said it will hand over its 100 percent stake in the North Atlantic Refining Limited (NARL) to SilverRange Financial Partners LLC for an undisclosed price.
The agreement includes the Come by Chance refinery in Newfoundland, a 115,000 barrel-per-day operation, as well as 53 gas stations and convenient stores.
Harvest said the deal, which is subject to regulatory approval, is expected to be finalized in the fourth quarter, without disclosing details of the contract.
KNOC took over the Calgary-based refinery for $1.7 billion in 2009, one of the largest acquisitions of a foreign oil producer for the state-run company.
The deal comes after a months-long search for a new buyer as the aging Canadian refinery has recorded losses in the past years due to worsening cracking margins in the North American market.
Harsh Rameshwar of SilverRange said the acquisition will help the New York merchant bank to expand its global outreach in the energy sector.
North Atlantic Refining "is strategically located along Atlantic crude oil shipping routes and provides access to petroleum markets in Europe and the U.S. Eastern seaboard," Rameshwar said in a news release. "Its clean fuel technology enables the refinery to produce low-sulphur, clean fuels, providing flexibility to refine crudes from many parts of the world. In addition, the marketing business is a unique and attractive stable margin asset."
KNOC is a state-owned oil and gas company engaged in the exploration and production of oil and gas along with storing petroleum resources.
The latest deal is part of wide-ranging efforts by state-run companies to reduce debt under the government's pledge to improve their financial structure.
Korea Resources Corporation, another state-run energy developer, has been seeking to sell its 10 percent stake in a $6.4 billion Cobre Panama copper project being pushed by First Quantum Minerals Ltd., a Vancouver-based mining company.
"Although the prospect for the Panama copper project is bright, the company decided to sell its stake to join state firms' normalization efforts," a company official said, asking not to be named. (Yonhap)
