Irving Oil Terminates Agreement to Purchase North Atlantic Refinery Limited

Canada-based oil refinery operator Irving Oil on Tuesday said it has terminated an agreement for the purchase of North Atlantic Refinery Limited.

Irving made the announcement on its website. In May, it had agreed to buy the owner of the idled 135,000 barrels per day Come-by-Chance refinery in Newfoundland, for an undisclosed price.

According to industry sources, Irving walked away from the purchase and share agreement shortly before it was set to close in mid-October.

“North Atlantic is actively looking for alternate buyer, but the market is very challenging,” said a source familiar with the matter.

North Atlantic declined to comment on internal matters.

U.S.-based energy company Origin International said it remained interested in purchasing Come-by-Chance after June media reports that it was interested in restarting fuel processing there in “a more environmentally sustainable model.”

“We await further clarity on the status of Come by Chance,” an Origin spokesperson told Reuters on Tuesday. The spokesperson said Origin has not done due diligence and was unaware “if any new sale process has begun.”

It is too soon for Newfoundland and Labrador to consider whether to buy the refinery since Origin is interested, said the province’s Industry, Energy and Technology Minister Andrew Parsons.

Parsons said Canada’s Competition Bureau had never decided whether Irving would have been permitted to buy North Atlantic.

Federal Natural Resources Minister Seamus O’Regan said he was monitoring developments and would be there for workers “no matter what the final outcome,” according to a statement from spokesman Ian Cameron.

“In the face of this global pandemic too many businesses are being closed and too many projects are being put on hold all over the world. And it’s workers who are bearing the brunt of it all,” Cameron said.

Come-by-Chance was the first North American refinery to close as fuel demand collapsed during the coronavirus pandemic.

It supplied major U.S. East Coast harbors including New York and Boston.

Refining margins have been pressured by lower processing rates due to an oversupply of distillate stocks, which include jet fuel. The crack spread - the difference between crude and fuel - is hovering around $10.50 a barrel.

The plant has been idled since early April. It was nearly sold in 2018, with Irving Oil as the leading bidder, but the two former oil traders at the helm of the refinery disagreed on the sale price and the sale subsequently fell apart.

Reporting by K. Sathya Narayanan in Bengaluru and Laura Sanicola in New York; Rod Nickel in Winnipeg and David Ljunggren in Ottawa; Editing by Chizu Nomiyama, Nick Zieminski and David Gregorio