Sunoco latest US oil company to exit refinery business

Sunoco Inc. intends to close its two remaining refineries in the US and concentrate on its pipeline and gas station business. If the company cannot sell the refineries by July 12, it plans to leave them idle and possibly turn them into terminals. Sunoco's two refineries had a combined capacity of about 510,000 barrels per day. Sunoco has been in the refining business since 1890. Earlier this year, Marathon Oil severed its refining arm and ConocoPhilips is also seeking to reorganize its business with refining as a separate entity.

Sunoco's move reflects the volatility in the oil refining business. It is only profitable when the refined product can be sold for more than the crude stock from which it was produced. In the case of Sunoco, this was not happening and its financial performance was deemed "unacceptable." The business has lost money in eight of the last ten quarters, according to a statement from CEO Lynn Eisenhans.

This is because Sunoco has relied on higher costing imports than some of the other US refineries that benefit from growing supplies of US and Canadian shale oil. The cost of Brent crude from the North Sea rose to $127.02 a barrel last April. That, combined with reduced demand, have made it unprofitable for the company to continue.