Irving Oil said Wednesday that a strategic review of the company is underway and that it is looking at a series of options about its future, including a possible sale of the business.
In a statement on its website, the company said consideration will be given to a new ownership structure, a full or partial sale, or a change in its portfolio of assets and how it operates them. It said it will evaluate its options in the coming months.
The statement is signed by chairman Arthur Irving, president Ian Whitcomb and executive vice-president Sarah Irving.
Irving Oil operates the largest oil refinery in Canada as well as Ireland’s only refinery, and has more than 900 gas stations and a network of distribution terminals.
Rob Moir, an associate professor with the University of New Brunswick’s faculty of business, said he was caught unaware by the announcement.
“They tend to hold their cards close to their chest, and then make an announcement. And this one certainly came that way,” he said.
Moir said he wonders what the reason is behind the company’s move. However, he said because it’s a private company, it’s not open to scrutiny the way a publicly traded company would be.
He pointed to the wildfires currently raging across the country even though the fire season has barely begun.
“Climate change is a reality. Fossil fuel companies — they don’t want to wake up to that reality, but it is a reality,” he noted.
“Is it going to be that big a change if a fossil fuel company that focuses on fossil fuel has to change its operations? Not necessarily, because guess what — that’s where we were going, whether or not we liked it.”
The sensible thing for the company to do, Moir said, would be to divest itself.
New Brunswick Premier Blaine Higgs blamed the federal emissions standards forced on the oil industry, which he said could have brought about the review.
He said he is concerned about the ripple effects from such a sale.
“They’re looking at a greener path forward. We want to see that happen in New Brunswick because it has a huge impact on our economy and employment in this province,” he said.
“I’d like to see the ownership remain here in New Brunswick, because I think that certainly is the best case scenario.”
Considering the company employs about 4,000 people, Moir said he would like to see the company hold a community discussion to talk about their changing role.
“They have to adapt. It’s good to pivot,” he said.
“(But) I hope they include the community in their pivot, because, you can’t deny the important role they play in the community.”
Higgs worked at Irving Oil in Saint John, N.B. where he held numerous positions until his retirement in 2010 when he stepped down as director of logistics and distribution.
It’s easy to take a stand against fossil fuels and say “just shut all this down,” but something new is not readily available, he said.
“How do we find a path that allows us to transition from fossil fuels to a new, cleaner energy?” he said.
Scott McKnight, a research associate with the University of Toronto’s Lupina Foundation Innovation Policy Lab, said the motivations of the sale could stem from Irving Oil being an intergenerational company, and the family may have run their course.
“So they now may be contemplating not just a big strategic change but possibly an outright sale,” he said.
Adding to that, he said while oil companies are still making record profits, it’s not the record incomes they had some time ago.
It’s also possible that the company could break up their “dirtier, fossil-fuel centric” assets from their non-carbon intensive assets, he said.
“Conglomerates are kind of a relic of actually many decades ago,” McKnight said.
“That’s not really a dominant business model these days where companies would have this far ranging empire with their thumbs in every different pie. … Irving (is) perhaps trying to catch up with the times.”
This report by The Canadian Press was first published June 7, 2023.
The Canadian Press
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