Shell, the multinational energy company, has reportedly shortlisted four companies as potential bidders for its refinery assets in Singapore. The shortlist includes China National Offshore Oil Corp (CNOOC), Vitol, Eversun Holdings, and Befar Group. The companies have been asked to submit formal bids by the end of February, with Shell aiming to close a transaction by the end of 2024. The assets up for sale include a refinery with a capacity of 237,000 barrels per day, as well as an ethylene plant capable of producing one million metric tons per year. Shell announced a strategic review of these assets in June and has hired Goldman Sachs to manage the potential sale.
The value of the assets and the potential sale price have not been disclosed. A Shell spokesperson stated that divestment is the company’s priority focus following the strategic review. The spokesperson declined to comment on the potential suitors or the timeline for the sale. CNOOC, Vitol, Befar, and Eversun have not responded to requests for comment.
The buyer of Shell’s Singapore assets would gain a foothold in Asia’s main oil trading hub, but would also face competition from newer refineries in China and elsewhere. Additionally, the buyer would need to consider the expected rise in Singapore’s carbon tax in 2024, which would increase the costs of running the plants. CNOOC, which has a partnership with Shell in a petrochemical venture in China, is looking to expand its downstream portfolio and global oil and chemicals trading. Vitol, on the other hand, may be interested in Shell’s Singapore site as an oil storage and distribution hub.
Overall, the potential sale of Shell’s Singapore refinery assets presents an opportunity for interested companies to establish a presence in Asia’s oil trading hub. However, they would also need to navigate competition, rising costs, and the challenges posed by the petrochemical industry’s recent lack of profitability.
-------------- -------------