According to a news release issued Oct. 8, KPI decided to put the refinery up for sale after re-evaluating its place within the company. KPI is a subsidiary of Kuwait Petroleum Corp., the state-owned energy company of Kuwait.

Once they [Gunvor Group] take it over, they will close down the base oil plant, FNV trade union officer Egbert Schellenberg told Lube Report in a phone interview. FNV is the Dutch Trade Union Federation.

Schellenberg explained the refinerys crude distillation unit was considered old and expensive for Gunvor to modernize. Theyre not going to do it, he said.

The refinery sale is subject to regulatory approval and a required employee consultation process.

Gunvor has informed the union it plans to reduce the workforce at the refiner from 350 to 250, Schellenberg said.

A workers council is in the midst of negotiations concerning the impact on workers at the plant, Schellenberg said, including conditions for the approximately 100 who will lose their jobs as a result of the changes. We hope to end those discussions before the end of the year, Schellenberg said. And then sometime in January, Gunvor would close the deal and be the new owner.

Were not commenting on the matter at the moment, since the deal has yet to be finalized, and aspects of it are under discussion, Gunvor Group Corporate Affairs Director Seth Thomas Peitras told Lube Report.

Stephen B. Ames of SBA Consulting, Pepper Pike, Ohio, noted that KPIs Europoort facility primarily employs hydroskimming processes and has little upgrading/conversion capability other than the Group I base oil plant.

Aside from base oils and gasoline, the refinery produces large amounts of high-sulfur fuel oil and bitumen, the latter two being low- or negative-margin products, Ames told Lube Report. He noted that the Marpol International Convention for the Prevention of Pollution has begun restricting the use of high-sulfur marine fuels in waters designated as Sulfur Emission Control Areas. Since the beginning of 2015, more stringent Marpol sulfur limits have markedly suppressed demand for high-sulfur marine fuels in the North and Baltic Sea SECAs.

The refinery had been losing money for a number of years, Ames pointed out. Accordingly, in 2014 KPI undertook a feasibility study to add a hydrocracker and Group III plant to the Europoort operation, he said. At over $1 billion, the answer came back no. It was then decided to seek buyers for the refinery.

According to Ames, eight parties were interested in the facility but only Gunvor was willing to operate the refinery. The others, and Gunvor as well, saw inherent value in the site as a crude and petroleum products terminal. By closing one crude unit and the base oil plant, Gunvor will be able to operate the smaller operation in manner similar to their Antwerp refinery whilst still having tankage available to bolster their trading activities, he explained.

He pointed out that KPI used little of its own base oil production in their branded lubricants operations, purchasing Group II and Group III base oils for their automotive formulations from third parties. At some point it had become one of whether or not it makes strategic sense to continue operating an asset for the benefit of their competition, Ames said.

Founded in 2000, Gunvor Group is an independent commodities trading company with experience acquiring and operating refineries. According to its web site, Gunvor wholly owns two refineries, both acquired in 2012: a 107,500 b/d refinery in Antwerp, Belgium; and a 110,000 b/d refinery in Ingolstadt, Germany. The refinery in Antwerp handles a wide range of intermediate and finished products, including liquid propane gas, naphtha, gasoline, heating oil, vacuum gas oil and bunker grades. The refinery in Ingolstadt sells light products and middle distillates such as gasoline, diesel, heating oil and jet fuel.