Valero CEO Sees Growth, but Not Acquisitions

Valero Energy Corp is taking advantage of low oil prices to aggressively build out its refining and logistical assets, but new acquisitions are not planned, Chief Executive Joe Gorder said at the company's annual shareholders meeting on Thursday.

 

"There is nothing currently pending," Gorder said of potential acquisitions. "I don't think there are any refining assets that are in the market that we would take a look at."

 

There were no great logistics assets up for grabs.

 

"Periodically, we have logistics assets coming into the market, but there is nothing that is hot right now," he said.

 

Valero, the largest U.S. refiner, currently has a utilization rate of 96 percent. Gorder said the company's major focus is increasing capacity at plants it already owns. That includes two new crude topping units at plants in Corpus Christi and Houston with a combined 160,000 bpd in light crude processing capacity.

 

Both will allow Valero to cut costs by producing more of its own feedstocks instead of buying them, and should start up in early 2016.

 

"They are not intended to drive increased production volumes, but they are more intended to optimize the system that we have in place," Gorder said.

 

Valero is also investing in logistics, from storage tanks to pipelines.

 

Valero could potentially use its Gulf Coast terminals to send crude oil to Mexico under swaps subject to approval by Washington. Mexico's state oil company has proposed a swap, although the U.S. Commerce Department has yet to okay it.

 

"The relationship with the Mexicans that has been talked about is a swap," he said.

 

"We would take their heavy sour crude, which they don't have the ability to process as well as we do in the Gulf Coast, and we would send them light sweet crude, which they have a greater need for. Valero is well positioned to do that."

 

Its Gulf Coast terminals currently export crude oil to Canada, where Valero has a plant. Canada is the only country that can receive imports of U.S. crude under current law.

 

He told shareholders Valero has seen crude oil prices stabilizing following the 50 percent slide that started in June.

 

"We are seeing stabilization of production here domestically," he said. "As we see prices rise back to this $60 level and perhaps moving up from there, we should see increased drilling activity again."