Valero Energy Corporation (VLO), Enterprise Products Partners L.P. (EPD) – Europe: The New Lucrative Market for Refiners

However, exports to Europe and the rest of the world do not require such credits and costs, posing a highly lucrative opportunity for the refiners. Indeed, Valero Energy Corporation (NYSE:VLO), like Phillips is seeking to make use of this, ramping up export capacity to 70,000 barrels per day of gasoline and 170,000 barrels per day of diesel fuel.

Once again this is nothing compared to the company’s total output, but Valero Energy Corporation (NYSE:VLO) is spending heavily to improve its Gulf Coast infrastructure. It will soon have the capacity to export 225,000 barrels per day of gasoline and 280,000 barrels per day of diesel fuel. That said, CEO Bill Klesse has stated that he does not want to put the company in a position of being an all-out exporter to avoid the issue of ethanol credits, but the use of exports to lower costs is certainly an attractive proposition.

Getting it there
Meanwhile, Enterprise Products Partners L.P. (NYSE:EPD) is seeking to gain from the transportation boom as more and more crude is demanded at refineries along the Gulf Coast in preparation for export. It is building downstream crude assets through the Houston Ship Channel expansion to accommodate more tankers alongside a pipeline project that will connect 12 Gulf Coast refineries with the export facilities in Beaumont and Houston.

It is also focusing on expanding its Enterprise Crude Houston (ECHO) crude oil terminal, which can process nearly 6 million barrels per day and is crucial to the Gulf Coast refining market. This puts Enterprise Products Partners L.P. (NYSE:EPD) in a key position to benefit from the huge flows of crude that are moving to the Gulf Cost for refining, exportation and transportation.

Foolish summary
As the Brent-WTI spread stays under pressure, refiners are pushing into the highly lucrative European market for refined products. This expansion should keep profits from collapsing. In addition, the drive to export will benefit the related industries such as pipelines and shipping.

The article Europe: The New Lucrative Market for Refiners originally appeared on Fool.com and is written by Rupert Hargreaves.

Fool contributor Rupert Hargreaves has no position in any stocks mentioned. The Motley Fool recommends Enterprise Products Partners L.P.

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