Environmental due diligence essential for refinery assets

In transactions involving petroleum refinery assets, thorough and careful due diligence is critical for identifying and quantifying environmental liabilities associated with the target asset

In recent years, US refineries have generally outperformed their upstream counterparts in terms of profits and revenue, benefiting from low crude costs and high crack spreads. However, the Covid-19 pandemic and the associated decline in global demand for petroleum products such as aviation fuel present unique challenges to refineries. These pressures may spur a wave of mergers, acquisitions and divestitures in the downstream sector. For those on the buy side, there may be significant bargains coming to market, allowing companies to deliver long-term value despite the market conditions. Conversely, refinery deals may carry significant downside risk, particularly with respect to environmental