The economics of buying an operational refinery remain more favorable than building a new one from scratch, Tesoro CEO Bruce Smith says. Tesoro owns and operates seven refineries with a total refining capacity of 660,000 b/d. Smith said that it is a "better risk" to buy and upgrade an existing refinery, and it should cost less than building a new one due to soaring construction costs. The lengthy time Smith says it takes to get needed returns is another factor, he said during a question-and-answer session at the OPIS 9th Annual National Supply Summit in Las Vegas this week. A new refinery could take about five years to build, and another five years for it to pay off, he said. Tesoro had looked at refinery acquisitions in Europe and other international locations but decided it would be more ideal to buy a refinery that could extend the company's geographic footprint.
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