en.Wedoany.com Reported - HF Sinclair Corp. has finalized long-term base oil supply agreements to secure feedstock for the spin-off and transformation of its lubricants and specialty products business. The company recently announced plans to close its base oil refinery in Mississauga, Ontario, Canada, which has a daily processing capacity of 15,600 barrels.

On July 28, HF Sinclair unveiled a downstream integration strategy, planning to shut down its Canadian refining operations and advance the independence of its lubricants and specialty products division. On August 3, the company confirmed it had reached strategic long-term commercial agreements with SK Enmove, a subsidiary of SK On Co. Ltd., and Chevron Products Co., a subsidiary of Chevron USA Inc., to build a diversified North American base oil supply network.

Under the agreements, following the retirement of the Canadian refining assets, SK Enmove will supply Group III base oils to HF Sinclair, and Chevron Products Co. will supply Group II base oils, maintaining base oil supply coverage.

In exchange, HF Sinclair's lubricants and specialty products business will serve as a distributor of SK Enmove's YUBASE Group III base oils in key regional markets across North America, and will distribute Chevron-branded Group II base oils in certain regions of Canada and the United States.

This supply arrangement is part of the overall transformation and spin-off plan for HF Sinclair's lubricants and specialty products division. In a presentation to investors on July 28, the company stated its intention to create two independent publicly traded companies in a manner that is tax-efficient for the company and its shareholders.

HF Sinclair stated that the new lubricants and specialty products company will focus on organic growth, consolidating the highly fragmented global lubricants and specialty products market, and reducing earnings volatility through a diversified set of end markets and a differentiated portfolio of finished and specialty products.

Subject to customary conditions and final approvals, the separation of the lubricants and specialty products division is expected to be completed within the next 12 to 18 months, while the retirement of the Mississauga base oil refinery is expected to be substantially completed by the end of 2027.

During the division spin-off and refinery retirement period, the lubricants and specialty products business will continue operations in the Ontario region, including research and development laboratories, lubricant blending and packaging activities, as well as supply chain, logistics, and commercial operations.

The spun-off lubricants and specialty products business will continue to receive Group I base oils and specialty products from HF Sinclair's refinery in Tulsa, Oklahoma, which has a daily processing capacity of 125,000 barrels. Combined with the newly introduced long-term sourcing sources for Group II and Group III base oils, the company is expected to offer a complete base oil product portfolio covering Groups I, II, and III to the market after the spin-off.

Following the completion of the separation of the lubricants and specialty products division, HF Sinclair plans to transform into a more agile, cash-generative integrated downstream operator, with existing assets including seven major crude oil refineries, integrated pipeline and terminal assets supporting refining operations, marketing businesses associated with the Sinclair-branded gas station network, and renewable diesel production facilities.