Refiner Tesoro Corp. has received formal approval from antitrust regulators to buy a BP Plc refinery in southern California for more than $2 billion without requiring any asset sales.
The Federal Trade Commission, which assessed the deal to ensure it complies with antitrust law, said there was evidence that combining the BP refinery and a Tesoro refinery, which nearly abut each other, could reduce the cost of producing the special, low-carbon gasoline that state law requires be sold in California.
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"Demand for California-grade gasoline has declined over the last decade and is projected to continue to do so. Additionally, seven major refiners supply the West Coast, and that number will not change as a result of the deal," said the FTC said in a statement.
California Attorney General Kamala Harris must also approve the sale before it can proceed. A spokesman for Harris said she had no immediate comment on the FTC decision.
Tesoro announced in August that it had agreed to buy BP's Carson plant. The final purchase price of the refinery and other assets is $2.375 billion, the company said in a statement.
Tesoro is the second-largest refiner in California, the nation's largest gasoline market, after Chevron Corp .
Adding the Carson refinery to Tesoro's other two California refineries gives Tesoro a combined crude oil throughput of 509,800 bpd, or 26 percent of the state's refining capacity, according to data from the U.S. Energy Information Administration.
The sale includes an 800-station retail network and distribution and storage assets.
Once the transaction is closed, BP's U.S. downstream operation will be solely focused on refineries in the northern continental United States, where cheaper Canadian crude oil is easily obtained.
The commission, which has one vacant seat, voted 3-0 to allow the deal to close. Commissioner Joshua Wright was recused.
(Reporting by Diane Bartz; Editing by Ros Krasny and Leslie Gevirtz)