By Jessica Resnick-Ault
NEW YORK, June 2 (Reuters) - Goldman Sachs Group Inc has agreed to a multi-year supply and offtake deal for ParPetroleum Corp's oil refinery in Hawaii, the latest sign of theWall Street bank's continuing clout in the competitive businessof physical commodities trading.
The bank's storied commodities trading arm, J Aron, hasreplaced Barclays Plc to supply crude to the refineryand buy its refined products following the UK bank's exit frommost commodity markets last year.
Barclays signed the deal less than two years ago with therefinery, which has capacity of 94,000 barrels a day. It was thefirst U.S. refinery contract by the bank as it sought to pushinto physical trading.
The purchase is Goldman's latest expansion in a shrinkingclub of Wall Street and European banks still involved in thelucrative business of dealing in physical commodities frombarrels of crude oil to containers of copper.
Amid increased regulatory glare and squeezed margins, WallStreet peers Morgan Stanley and JPMorgan Chase & Co have sold their physical commodities operations toupstart energy merchants.
Barclays announced its retreat from most commodities inApril last year.
Goldman has said the century-old J Aron enterprise, run fora period by Goldman President Gary Cohn in the 1990s, is core toits business.
It has similar offtake deals with Alon USA Energy's Big Spring refinery in Texas and Lion Oil's El Dorado, Arkansasrefinery.
Terms of the deal were similar to those with the UK bank: itwill run for an initial three years with two one-year extensionoptions.
Par said it will alleviate the burden on working capital andreduce price-volatility risks, by allowing for deferral ofpayments to Aron of up to $125 million or 85 percent of certainreceivables and company-owned inventory.
That will result in about $20 million in additional cash andliquidity under current market conditions, it said.
Houston-based Par signed up the bank almost a year afterJohn Eleoterio, who previously ran Barclays' commoditiesbusiness, joined Goldman as a managing director, a sourcefamiliar with the situation said.
Billionaire Sam Zell's Zell Credit Opportunities Master Fundowns 32.5 percent of Par. Par also owns 34 percent of a gasproducer in the Piceance Basin of Colorado and distributes crudeoil from the Western United States and Canada to refining hubs.
The company did not immediately respond to requests forcomment. A spokesman for the bank declined to comment beyond thePar statement. (Reporting By Jessica Resnick-Ault, Editing by Josephine Masonand David Gregorio)