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Irving Oil storage tanks are seen in St John's, on Oct. 17, 2018.

Chris Wattie/Reuters

Canadian oil giant Irving Oil Ltd. has signed an agreement with U.S. investment firm Silverpeak to acquire a Newfoundland refinery that shut down production earlier this year.

Under the deal, which is subject to regulatory approval, Irving will pick up the 135,000-barrel-a-day refinery in Come By Chance, N.L., a network of retail sites and other marketing assets. About 90 per cent of the petroleum products made at the plant are exported to foreign markets.

The refinery in the small community of Come By Chance, about 150 kilometres west of St. John’s, opened in 1973. Since then, the beleaguered plant has been the site of Canada’s largest bankruptcy, labour unrest and production issues, and has cycled through more than half a dozen owners.

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New York-based Silverpeak bought the plant from Harvest Oil Operations Corp. in 2014, which had picked it up from Korea National Oil Corp., an entity owned by the South Korean government.

Previous owners included Harvest Energy Trust, a Swiss trading company called Vitol Holdings, and Petro-Canada, which bought the refinery, which was inactive at the time, for $10-million in 1980. Six years later, it sold the refinery for $1 to Bermuda-based Newfoundland Energy Ltd., which got the site up and running again in 1987.

No details, including the price, were made public when the deal was announced on Thursday. The refinery halted production in March because of the COVID-19 pandemic and the plunging price of oil.

Michael Ervin, vice-president of the petroleum industry consultancy the Kent Group Ltd., said the purchase is a “rational move by Irving” that will give the New Brunswick-based company more capacity and flexibility to extend its reach into the New England states.

“I think it’s based on a long-term projection that many organizations hold – including the Kent Group – that demand for gasoline is going to remain fairly robust over the long term,” Mr. Ervin told The Globe and Mail.

“[Irving] clearly sees the Come By Chance refinery as a long-term player, even as some other refineries might close.”

He said the purchase is even more valuable since the largest refinery on the Eastern seaboard shut down last summer. Philadelphia Energy Solutions announced after a fire in June that it would permanently close its 150-year-old refining complex.

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Newfoundland and Labrador Natural Resources Minister Siobhan Coady said she spoke about the deal on Thursday with the president of Irving, who told her the company plans to bring the refinery back up to full production.

Ms. Coady told The Globe that’s good news for her province, given that the North Atlantic refinery employs about 400 people and contributes mightily to the Newfoundland’s fuel security.

Silverpeak has spent about $400-million on improving the refinery’s operations over the past few years, she said, adding she expects the regulatory review of the sale to take 60 to 90 days.

Irving’s purchase of the Come By Chance plant comes after its decision to use tankers to ship Western Canadian crude from B.C. through the Panama Canal and up to its New Brunswick refinery. Irving was given the green light from the Canadian Transportation Agency to use foreign, medium-sized tankers to transport Canadian oil from Burnaby – the terminal for the federally owned Trans Mountain pipeline.

Irving spokeswoman Candice MacLean said in a statement the refinery purchase is part of the company’s broader plan to create energy security for its customers and Canada.

It also builds on investments in the broader Atlantic basin in the Northeastern United States and Ireland, she said.

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North Atlantic Refining Corp., which runs the Come By Chance operation, would not comment on the deal, saying it’s a pending transaction.

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