ConocoPhillips Could Sell Louisiana Refinery Before Spin-off (COP, BX)

In July, ConocoPhillips Corp. (NYSE: COP) announced that it would spin off its refining and marketing business into a separate company in the first half of 2012. Now, it seems, the company might be trying to sell at least one of its refineries before the spin-off is completed.

A report from Bloomberg suggests that Conoco is interested in selling its 247,000 barrel/day Alliance refinery in Louisiana for $700 million-$1 billion. One prospective buyer is PBF Energy Partners LP, which is controlled by Blackstone Group LP (NYSE: BX) and First Reserve Corp.

Conoco has declined to comment on the report, saying its does not respond to speculation and rumors. Still, the Alliance refinery represents about 12% of Conoco’s total refining capacity of about 2 million barrels/day, and it’s curious that the company would try to sell it before the spin-off is completed.

One possible reason for the reported sale is that Conoco would like to get rid of nearly half its refining capacity in the Gulf Coast region, where crude prices have been higher than at its other refineries in the Midwest and elsewhere in the US. Conoco has benefited greatly from the WTI-Brent crude price differential and could be eager to consolidate its refining operations before the spin-off.