El Paso Corp. plans to sell its Corpus Christi refinery for approximately $290 million this year as part of broader plans to unload $1.1 billion worth of petroleum assets in 2003 as the pipeline tries to drum up much needed cash.

El Paso last week said that it would sell another $2.9 billion in assets to help provide funds for continuing operations. The company currently has liquidity of $2.6 billion, but only about $600 million is cash. The company also said that it would cut its common stock dividend by 82%, a larger amount than was expected by some analysts, to provide about $425 million in annual cash flow (see Daily GPI, Feb. 6).

In a filing made with the Securities and Exchange Commission on Monday, El Paso offered additional details on its plans to sell $1.1 billion worth of petroleum assets in 2003. El Paso noted that the Corpus Christi refinery has been under lease to Valero since June 2001 and Valero has an option to buy these assets during the first half of 2003. The anticipated sale of this refinery will reduce long-term debt by applying sales proceeds to the $240 million of debt associated with the lease.

“Other petroleum assets targeted for sale include the Eagle Point refinery and related facilities, our nitrogen chemical plant assets, our Texas and Louisiana crude businesses and miscellaneous petroleum pipelines and petroleum products facilities,” El Paso noted.

Meanwhile, the company also used the filing to detail the expected impact from Standard & Poor’s Ratings Services lowering of El Paso’s credit ratings to ‘B+’ from ‘BB’ last Friday. El Paso in November it estimated that the cash demand required by lower debt ratings would be around $2.2 billion. “Last week, we stated that we expected total demand to be approximately $2 billion, or $200 million lower than our original estimate.”

El Paso said that although it’s difficult to predict actual cash demand based on last week’s S&P action, “we expect some incremental cash demand, and currently believe that the $2.2 billion original estimate is more appropriate.”

©Copyright 2003 Intelligence Press Inc. All rights reserved. The preceding news report may not be republished or redistributed, in whole or in part, in any form, without prior written consent of Intelligence Press, Inc.