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UPDATE 2-Marathon Petroleum to buy BP Texas City refinery

* Marathon to purchase refinery for $598 million

* Inventory worth around $1.2 billion

* Marathon could pay up to another $700 mln over six years

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Oct 8 (Reuters) - Marathon Petroleum Corp struck a deal to buy BP's Texas City refinery and related infrastructure for up to $2.5 billion, a purchase that would make Marathon the fourth-largest refiner in the United States.

Marathon said on Monday it agreed to buy the 451,000 barrel- per-day refinery, one of the largest in the country, as well as the plant's inventory, three intrastate natural gas pipelines and other assets.

The Texas City refinery was the site of a 2005 explosion that killed 15 workers, injured 180 others and resulted in a $13 million fine for BP to settle safety violations at the plant.

London-based BP has been selling off assets as it focuses more on northern U.S. refineries with better access to cheap Canadian oil supply. It is also raising cash to help pay damages for the worst offshore oil spill in U.S. history.

Marathon Petroleum's shares rose nearly 9 percent to $59.62 in early trading on the New York Stock Exchange.

The U.S. company said it will also acquire an allocation of BP's Colonial Pipeline Co shipper history, four terminals, retail marketing contract assignments for approximately 1,200 branded sites, and a 1,040 megawatt cogeneration facility.

The base purchase price is $598 million, plus inventories estimated at $1.2 billion, Marathon Petroleum said.

The agreement also contains a provision under which Marathon Petroleum could pay BP up to $700 million more over six years.

The transaction, which is expected to boost earnings in the first year of operation, is expected to be funded with cash on hand and is anticipated to close early in 2013, Marathon said.

(Reporting by Steve James and Michael Erman; Editing by Leslie Adler and Maureen Bavdek)

((steve.james@thomsonreuters.com)(1-646-223-6013)(Reuters

Messaging: steve.james@thomsonreuters.com))

Keywords: MARATHON/BP