Par Petroleum Corporation announced that Hawaii Independent Energy, LLC has entered into a Supply and Offtake Agreement with J. Aron & Company.
The agreement provides for HIE to purchase from Aron mutually agreed crude oil cargos for use in its Hawaii refinery with a nameplate capacity of 94 000 bpd. Aron, in turn, will purchase the refined products HIE produces at market prices. HIE will repurchase the refined products from Aron and sell to its customers.
The term of the agreement will run through May 2018 with two one-year extension options. The agreement also allows for deferral of payments to Aron of up to US$125 million or 85% of certain receivables and company owned inventory. This arrangement with Aron is expected to result in approximately US$20 million in additional cash and liquidity under current market conditions. Added benefits include increased liquidity, reduction in HIE's crude acquisition costs, and increased flexibility to manage market price fluctuations.
Joseph Israel, Par's President and CEO, commented, "We are excited by the prospects of a new supply and offtake arrangement for our Hawaii refinery. This agreement provides a cost-effective and flexible structure for our crude oil needs and helps to maximise the capacity utilisation of our refinery. Securing this new arrangement generates additional liquidity and is an important step towards further improving the future performance of our refinery."
Adapted from press release by Joseph Green
Read the article online at: https://www.hydrocarbonengineering.com/refining/03062015/par-aron-reach-agreement-890/