Valero Energy (VLO +18.2%) has cut process rates in at least 6 of its 12 U.S. refineries by an average of 15% due to lower demand and may make deeper cuts next week, Bloomberg reports.
Valero reportedly has made reductions at refineries in Memphis, Tenn.; McKee, Tex.; Wilmington, Calif.; Benicia, Calif.; St. Charles, La.; and Meraux, La.
The company's largest refinery in Port Arthur on the Texas Gulf Coast has not yet made run cuts, according to the report.
Deeper cuts are expected next week, which could reduce Valero's U.S. production to about a third of capacity, near minimum operating rates.
Valero joins other U.S. refiners such as Marathon Petroleum (MPC +15.7%) and Phillips 66 (PSX +10.3%) in reducing rates, delaying maintenance and cutting on-site staff as demand slumps and the economy weakens from the coronavirus.
https://www.dtnpf.com/agriculture/web/ag/news/business-inputs/article/2020/03/26/gasoline-demand-hits-covid-19-affect-2
In letters sent to traders this week, the company said it was unable to fulfill contracts with traders who sell dried distillers grains for its plants in Albion, Nebraska, and Albert City, Iowa. In addition, Valero has notified corn purchasers for its Lakota, Iowa, ethanol plant that it is not buying corn.
Valero cited the pandemic as a force majeure event in making the decisions.
Force majeure is a clause included in contracts to remove liability for natural and unavoidable catastrophes that interrupt the expected course of events. In this case, Valero isn't required to fulfill its contract obligations.
Valero can't pay it's bills? Poor little Multi Billion $$$ Oil Companies.
