Goldman replaces Barclays in oil offtake for Par's Hawaii refinery

By Jessica Resnick-Ault

NEW YORK, June 2 (Reuters) - Goldman Sachs Group Inc has agreed to a multi-year supply and offtake deal for Par Petroleum Corp's oil refinery in Hawaii, the latest sign of the Wall Street bank's continuing clout in the competitive business of physical commodities trading.

The bank's storied commodities trading arm, J Aron, has replaced Barclays Plc (LSE: BARC.L - news) to supply crude to the refinery and buy its refined products following the UK bank's exit from most commodity markets last year.

Barclays signed the deal less than two years ago with the refinery, which has capacity of 94,000 barrels a day. It was the first U.S. refinery contract by the bank as it sought to push into physical trading.

The purchase is Goldman's latest expansion in a shrinking club of Wall Street and European banks still involved in the lucrative business of dealing in physical commodities from barrels of crude oil to containers of copper.

Amid increased regulatory glare and squeezed margins, Wall Street peers Morgan Stanley (Xetra: 885836 - news) and JPMorgan Chase & Co (Xetra: 850628 - news) have sold their physical commodities operations to upstart energy merchants.

Barclays announced its retreat from most commodities in April last year.

Goldman has said the century-old J Aron enterprise, run for a period by Goldman President Gary Cohn in the 1990s, is core to its business.

It has similar offtake deals with Alon USA Energy's Big Spring refinery in Texas and Lion Oil's El Dorado, Arkansas refinery.

Terms of the deal were similar to those with the UK bank: it will run for an initial three years with two one-year extension options.

Par said it will alleviate the burden on working capital and reduce price-volatility risks, by allowing for deferral of payments to Aron of up to $125 million or 85 percent of certain receivables and company-owned inventory.

That will result in about $20 million in additional cash and liquidity under current market conditions, it said.

Houston-based Par signed up the bank almost a year after John Eleoterio, who previously ran Barclays' commodities business, joined Goldman as a managing director, a source familiar with the situation said.

Billionaire Sam Zell's Zell Credit Opportunities Master Fund owns 32.5 percent of Par. Par also owns 34 percent of a gas producer in the Piceance Basin of Colorado and distributes crude oil from the Western United States and Canada to refining hubs.

The company did not immediately respond to requests for comment. A spokesman for the bank declined to comment beyond the Par statement. (Reporting By Jessica Resnick-Ault, Editing by Josephine Mason and David Gregorio)