Delta drops BP fuel contract early at airline's Trainer refinery

NEW YORK Thu Jul 24, 2014 6:27pm EDT

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NEW YORK (Reuters) - Delta Air Lines Inc (DAL.N) has severed a multi-year contract with BP (BP.L) to exchange refined fuels from Delta's Trainer refinery for more jet fuel, the company said on Thursday.

A "product exchange contract" between Delta's subsidiary Monroe Energy LLC and BP Products North America (BP.L) was terminated effective July 1, Delta said in its quarterly SEC filing. Delta said it replaced BP with another counterparty that it did not name. The airline said the termination was early, but did not say when the contract had been due to end.

A Delta spokesman did not return calls for additional comment. A spokesman from BP declined to comment.

When Delta bought the 166,000 barrel per day (bpd) Philadelphia-area refinery in mid-2012, it struck several agreements to supply crude and buy its refined products, minimizing its need to trade directly in the oil market.

One of those was a multi-year agreement with BP, which was to buy some of the refinery's "non-jet fuel" products, such as gasoline and diesel, and sell jet fuel back to Delta. It struck a similar deal with Phillips 66 (PSX.N) to swap Trainer's refined products for more jet fuel.

The SEC filing made no mention of another agreement from 2012: a three-year deal under which BP was to supply crude oil to the refinery.

On Monday, Monroe announced that privately-held midstream company Bridger LLC would supply 65,000 bpd of North Dakota Bakken crude to its refinery, helping it reduce its reliance on more costly imports.

In the first half of 2014, Monroe exchanged products worth a gross fair value of $2.5 billion with BP and other counterparties, including Phillips 66, the filing showed.

(Reporting by Anna Louie Sussman, editing by Jonathan Leff and David Gregorio)

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