Union Oil Buys 16% of Colonial Pipeline

Union Oil Co. of California has exercised its option to purchase 16.78% of Colonial Pipeline Co., which currently is owned by Gulf Oil Corp., for $130 million, it was announced Thursday.

Sale of Gulf’s interest in Colonial was one of the conditions set down by the Federal Trade Commission in 1984 when Gulf was acquired by Chevron Corp.

The Colonial system is the largest petroleum products pipeline system in the U.S., connecting Gulf Coast refineries with markets in the Southeast and East Coast, according to officials of Union Oil, which is the principal operating subsidiary of Los Angeles-based Unocal Corp. The system delivered more than 1.6 million barrels a day of refined products last year, the officials added.

Acquisition of the Gulf shares will increase Union’s ownership in Colonial to more than 20%, making it Colonial’s largest shareholder. Other owners of Colonial include Amoco Pipeline Co., Mobil Pipeline Co., Atlantic Richfield Co., Continental Pipe Line Co., B.P. Oil Inc., Texaco Inc., Cities Service Pipeline Investment Co. and Phillips Petroleum International Investment Co.