Hawaii Pacific Energy LLC, a subsidiary of Houston-based Par Petroleum Corp., has entered a crude oil supply and product offtake agreement with J. Aron & Co., the commodity trading arm of Goldman Sachs, for its 94,000-b/d refinery in the Campbell Industrial Park in Kapolei, 20 miles west of Honolulu, Ha., on the island of Oahu.
As part of the agreement, J. Aron will provide HPE to purchase mutually agreed crude cargos to process in the refinery, while HPE, in turn, will sell its refined products to J. Aron at market prices, Par Petroleum said.
The agreement, which will extend through May 2018 with two 1-year extension options, also will allow for HPE to repurchase refined products from J. Aron to sell to its own customers, as well as defer payments to J. Aron of up to up to $125 million, or 85% of certain receivables and company-owned inventory, the company said.
Par Petroleum said that in addition to reducing HPE’s crude acquisition costs and increasing its flexibility to manage market price fluctuations, the deal with J. Aron will result in about $20 million in additional cash and liquidity under current market conditions.
Increased revenue resulting from the transaction will help to maximize capacity utilization of the refinery as well as enable projects to improve its future performance, according to Joseph Israel, president and chief executive of Par Petroleum.
Par Petroleum completed its acquisition of the Kapolei refinery from Tesoro Corp. in September 2013 (OGJ Online, Sept. 27, 2013).
In addition to its 94,000-b/d crude distillation unit, the refinery includes the following processing capacities: 40,000 b/d of vacuum distillation, 13,000 b/d of naphtha hydrotreating, 18,000 b/d of vacuum gas oil hydrocracking, 2,000 b/d of diesel hydrocracking, 11,000 b/d of visbreaking, and 13,000 b/d of catalytic reforming.
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