Chapter 1698 The Tenth Largest Oil Refinery

The tax reform proposed by Donald did not actually cause a shock in the entire business community in the United States. Most companies tend not to discuss how much they can benefit from the tax reform, because the terms of the tax reform have been changing, and companies need to understand the policy. The implication also has to carefully figure out the differences in fine adjustments. Almost every leader will make a fuss about the tax reform plan, and everyone is not surprised.

Only this time, it's the turn of energy and airlines to benefit, why not mention banks? Because Wall Street will always be the beneficiary, no matter who comes to power, they cannot do without the support of Wall Street, and their benefits are naturally indispensable.

The most likely to be adjusted should be corporate taxes, and of course the corresponding tax cuts for multinational companies repatriating overseas cash to the United States.

In this regard, Yang Cheng is most concerned about the tax changes in the energy sector, because the actual tax rate of oil and gas companies is the second highest among all industries. If the corporate tax can be met, the profits of the energy industry will be greatly improved.

The other is the transportation industry. After the tax cut, the transportation industry can have more funds to upgrade equipment and services. The aviation industry will undoubtedly benefit the most. The large sum of money saved will be used to purchase more aircraft to realize the improvement of old equipment. update.

This is undoubtedly the top priority for Delta Air Lines. In order to save their lives, Delta Air Lines purchased a large number of second-hand aircraft, but thanks to advanced renovation technology, the aircraft did not look so bad, but the parts It is an indisputable fact that the replacement of new aircraft has long been put on the agenda. It coincides with the tax reform. If this expenditure can be deducted from the reduced tax, the financial pressure of the group will be greatly reduced. This is undoubtedly a good thing.

Not only that, the oil refinery will also benefit. If the tax reform is successfully promoted, it is not a bad thing to invest in the oil refinery now. At least during the few years that Donald has been in power, he will not overthrow his proposal and slap himself in the face, but Who knows, this guy is moody, he can do anything, and he doesn't go back once or twice.

However, there is no problem with the intention, but the target is not easy to find. After entering the 1980s, with the advancement of technology, the intensification of market competition, and the continuous improvement of environmental protection requirements, the oil refining industry entered the era of meager profits, and the industry began to undergo continuous structural adjustment.

In recent decades, U.S. oil refining capacity has no longer expanded on a large scale, and mergers and reorganizations among enterprises have been frequent. Up to now, there are only more than 130 oil refining companies in the United States, which can be used as potential targets for Delta Air Lines to choose, and less than four one-third.

"Do you have any good acquisition targets?" Yang Cheng asked.

Bastian is also fully prepared to come, "Our first choice must be on the east coast, not too far away from Pennsylvania."

"Why is it the east coast? Isn't the central part okay?"

"It's not impossible,

But on the whole, the number of refineries on the east coast is small, and most of them are concentrated near Washington and New York, and the scale is relatively small.

At present, there are 9 refineries with a production capacity of 62 million tons per year, accounting for only 7% of the total production capacity in the United States. Among them, there are only 3 refineries with a capacity of more than 10 million tons, and the average size of refineries is 7 million tons per year.

More than half of the refineries only have a simple refining process, and the east coast is a crude oil-scarce area, lacking large oil fields, and the total output is only 1% of that of the United States. The oil used by refineries mainly relies on imported resources, which are imported by water from Europe, North Africa and the Middle East Imported from other places, the logistics conditions are poor.

Moreover, due to the longitudinal isolation of the Appalachian Mountains, it is difficult for refineries on the entire east coast to obtain crude oil and oil pipelines in the oil-producing areas of the Midwest, and refined oil products are mainly transported by rail and ship.

But it has to be said that the East Coast has the largest market capacity in the United States and is the region with the largest consumption of oil products in the United States. Last year, the consumption of oil products reached 250 million tons, accounting for more than 30% of the total consumption in the United States.

Investing in oil refineries on the east coast, the refined oil produced can be supplied to large areas of cities besides our own use, and we have North Sea Oil to supply crude oil, so we don’t have to worry about running out of oil to refine. "

Yang Cheng crossed his legs and asked, "I remember that the refineries in the east coast are priced with Brent crude oil, right? Compared with the refineries with WTI crude oil, the gross profit is too small."

"Yes, when the broad East Coast market, will make up the gap."

"Okay, so do you have a specific goal?"

"Yes, also in Pennsylvania, the oldest and largest oil refinery on the East Coast of the United States - Philadelphia Energy Solutions' Philadelphia Refinery.

I got word that the Philadelphia refinery was on the brink of bankruptcy and they couldn't afford to pay the $800 million they were spending to meet the EPA's renewable fuel standards.

Refiners must either blend crude oil with renewable fuels or buy allowances under U.S. Environmental Protection Agency requirements, a move that will significantly increase refinery production and operating costs. "

Yang Cheng was very surprised, "Wait? Is this environmental protection standard uniform? Or is it only for certain companies with excessive pollution?"

"It is a unified boss. In the past 10 years, the US oil refining industry has invested about 47 billion US dollars in environmental protection projects, mainly for the production of low-sulfur unleaded gasoline that is more conducive to environmental protection.

In order to prevent enterprises from discharging pollutants at will, the Environmental Protection Agency has also formulated very strict and harsh environmental laws and clean air laws. Relevant regulations on air quality, water quality, waste and vehicle exhaust emissions are updated every year. In addition, refineries It is also necessary to produce gasoline and diesel oil with different standards according to federal standards, state ZF standards and local ZF standards. Under such internal and external environmental constraints, many oil refining companies have high investment and low output, and some refineries cannot To adapt to the increasingly fierce competition in the industry was forced to close.

The Philadelphia refinery was one of the victims. "Bastian looked calm, as if he had anticipated Yang Cheng's question long ago.

After a short pause, he explained, "boss, what we need is high-quality aviation fuel, and the requirements for the refinery are already very high. In order to meet the requirements of the Environmental Protection Agency, the Philadelphia refinery has carried out several equipment upgrades, but the profits continue to decline. Under such circumstances, it is difficult to recover the funds invested in updating equipment, which is an important reason for their bankruptcy, and the 800 million US dollars requested by the Environmental Protection Agency is the last straw that breaks the camel's back.

However, after our acquisition, the refinery will switch to producing high-quality aviation fuel, which will be paid for by us and our partners and other airlines. "

Yang Cheng nodded to express understanding~

Bastian took a sip of coffee to moisten his throat, and continued to introduce, "Philadelphia Refinery is headquartered in Philadelphia, which is conducive to the joint management of the small refinery we acquired before.

At present, the Philadelphia Oil Refinery is mainly engaged in petroleum refining and refined oil sales. It owns 1,300 acres of land and currently has a crude oil processing capacity of 335,000 barrels per day, about 15 million tons per year.

The Philadelphia Refinery is the largest petroleum refining company in Pennsylvania and the 10th largest refining company in the United States, with more than 1,100 full-time employees. They provide more than a quarter of the refining capacity on the East Coast of the United States and also serve the gasoline and diesel markets in New York Harbor largest oil refinery in

Yang Cheng interrupted and asked, "Who is the controlling party?"

"It's the Carlyle Group and its joint consortium. Don't worry, boss, they have made it clear that they want to sell~"

Yang Cheng's fingers tapped rhythmically on the armrest of the leather sofa, "It doesn't sound like the situation is too complicated, and the location and scale are not bad."

Bastian immediately echoed, "Indeed, the Philadelphia oil refinery is located in the developed eastern region of the United States, with very convenient transportation, and there are many crude oil suppliers that have previously cooperated, including crude oil from Canada, and crude oil from Latin America, the Middle East, and Africa." Importing crude oil can save us from relying on the North Sea oil family."

Yang Cheng said, "Recently, due to the sharp drop in oil prices in the Bakken shale oil and gas fields, the oil supply is much lower than in previous years. If you calculate carefully, it might be more expensive to transport oil from the Bakken than to import it."

"That's right, and the Philadelphia Oil Refinery built a new crude oil railway unloading terminal last year. Currently, it is temporarily suspended due to funding problems. If we can take over and make up for the operating funds, when the project is completed and put into use, it can load and unload 4 units of crude oil per day. , which is roughly equivalent to a daily throughput of 280,000 barrels, which is enough to ensure the company produces the required raw materials.

To be honest, we were lucky. If the EPA hadn't come up with such a sudden trick, we might not have been able to buy the Philadelphia refinery. "

Yang Cheng pondered for a long time, and finally made a decision, "Since you have made such full preparations, your hard work can't be in vain. Let's talk about it. If the price is right, it will do no harm to us, but you should pay attention to labor. More than 1,000 employees, this is not a small expense, and the labor cost is still rising every year, if it cannot be controlled, it will drag down the refinery sooner or later."

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