UPDATE 1-Irving Oil in talks to buy Newfoundland refinery -report

Fri Oct 18, 2013 10:18am EDT
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(Adds background on sale process, and refinery)

Oct 18 (Reuters) - Irving Oil Ltd is in talks to purchase the Come By Chance oil refinery in Newfoundland, Canada, according to a local media report.

The refinery is owned by South Korea's state-run Korea National Oil Corp (KNOC), which earlier this year disclosed that it was considering selling 'non-core parts' of its loss-making Canadian energy subsidiary Harvest Operations and reviewing other overseas assets for potential sales.

A KNOC official in Seoul declined to comment on the report.

The plan was outlined after South Korea earlier this year initiated a review of its overseas investments in the oil and gas sector due to poor profitability.

A senior KNOC executive told reporters in September the firm hired Deutsche Bank to evaluate a possible sale of the refinery and other non-core assets.

"To us, the refinery is non-core part but that does not mean that we will sell it for sure," Jeong Chang-seok, director & executive vice president at KNOC, said last month.

The refinery, which has a capacity of 115,000 barrels per day, was built back in the early 1970s and has had a troubled history. Since its initial owners went bankrupt the refinery has changed hands many times, before being bought in 2006 by Harvest Energy. In December 2009, Harvest's operations were sold to KNOC, the refinery's current owners.

Some fear the money-losing refinery is likely doomed as potential acquirers are more interested in Harvest's upstream assets in Alberta.   Continued...