Valero Energy, America’s biggest oil refiner, yesterday said that it would be interested in bidding for BP’s Texas City refinery, should the oil giant choose to sell.

A spokesman for Valero told The Times that BP’s refinery – the site of an explosion in 2005 that killed 15 people and injured 170 – “technically” met its criteria as a bid target and that the company was currently looking to make acquisitions.

Valero, which is valued at $33 billion (£16.5 billion) on the New York Stock Exchange, with a cash pile of $2.4 billion at the end of 2007, specialises in buying distressed assets such as near bankrupt refineries or sites that require significant investment.

In the past, Valero has financed similar deals with a mixture of new stock, traditional borrowings and cash. It is understood that BP’s Texas refinery is difficult to value because it has not operated at full capacity since the explosion and because a new owner is likely to be sceptical about the amount of new investment needed and what safety problems still exist. However, some experts have estimated that the refinery would fetch at least $5 billion.

The value of refineries in the US has soared over the past few years as refining capacity has failed to keep up with surging demand for gasoline, whose price continues to be pressured by supply fears, exacerbated by high winter demand and instability in major oil producers.

BP’s refinery is attractive to Valero because it fulfils its four main bid criteria – that it is large, complex, near water, and has synergies with Valero’s existing plants. The BP refinery is situated right opposite Valero’s.

However, Valero pointed out that it believes that BP has not put the refinery up for sale and that it is not currently in talks with the oil giant about a possible disposal. A spokesman for BP in the US failed to return calls.

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