US-based refiner PBF Energy has signed a letter of intent with Air Products and Chemicals to sell five of its hydrogen steam methane reformer (SMR) hydrogen production plants for $530m in cash.

In addition to the sale, the company has agreed to enter into off-take arrangements for long-term supply of hydrogen to its refineries.

PBF chairman and chief executive officer Tom Nimbley said: “The board and management of PBF Energy have acted swiftly and decisively to secure our business in these unprecedented markets. We are also taking necessary steps to ensure the safety of our employees.

“We are focused on generating and preserving the liquidity needed for the duration of the near-term, economic impacts of stay-at-home orders and the longer-term recovery of demand for our products.  Discussions with suppliers and service providers are actively occurring and we’re grateful for their cooperation.”

The five hydrogen production projects are located in California and Delaware

The SMR plants included in the sale collectively produce approximately 300 million standard cubic feet per day capacity, and are located in Torrance and Martinez, California and Delaware City in Delaware. The transaction is expected to be completed during the third quarter of 2020 fiscal year.

According to the company, hydrogen is used in petroleum refining processes to remove impurities in crude oil, including sulphur, olefins and aromatics to meet product fuels specifications.

Air Products operates 12 industrial gas facilities in California, including five hydrogen production plants. In addition, the company also supplies hydrogen for fueling and fueling infrastructure in California to support the growing fleet of hydrogen fuel cell electric vehicles.

Air Products Chairman, president and chief executive officer Seifi Ghasemi said: “Air Products has a very strong balance sheet. This puts us in an outstanding financial position to execute our strategy of investing in long-term onsite deals, which includes asset acquisitions like the one we are announcing today.

“With this acquisition, not only do we gain five SMR plants, but we also secure a long-term hydrogen sale of gas agreement with an existing customer who is one of the largest independent refiners in North America.”