Shell finalizes sale of Malaysian refinery

Royal Dutch Shell PLC has completed the sale of subsidiary Shell Overseas Holdings Ltd.’s majority interest in Shell Refining Co. (FOM) Bhd. (SRC) to Malaysia Hengyuan International Ltd. (MHIL), a subsidiary of China’s Shandong Hengyuan Petrochemical Co. Ltd. (SHP), Shandong (OGJ Online, Jan. 27, 2016).

MHIL purchased Shell’s 51% stake in SRC, including the 125,000-b/d refinery in Port Dickson, Malaysia, for $66.3 million, Shell said on Dec. 22.

The sale, however, will not end Shell’s downstream presence in Malaysia, which remains an important retail fuels and lubricants market, according to the company.

Alongside maintaining supply to its Malaysian retail and commercial customers, Shell said it also will honor other existing commitments in the region through existing comprehensive supply agreements.

Shell’s decision to shed its interest in SRC follows the company’s ongoing strategy to concentrate its downstream footprint on a smaller number of assets and markets where it can be most competitive.

This latest transaction joins Shell’s growing list of other recently announced and completed downstream divestments, including the finalized sale of nearly all its interest in Japanese refiner Showa Shell Sekiyu KK on Dec. 19 (OGJ Online, Dec. 19, 2016).

Additional downstream consolidation moves by the Dutch firm include:

• The proposed sale of its 37.5% minority interest in PCK Raffinerie GMBH's 220,000-b/d refinery in Schwedt, Germany, to Varo Energy BV, a midstream company owned by The Carlyle Group and Vitol Group (OGJ Online, Dec. 20, 2016).

• The pending $80-million sale of its Danish subsidiary AS Dansk Shell—including the 70,000-b/d Fredericia refinery, local trading and supply activities, as well as long-term purchase and sales agreements for refinery feedstocks and finished products—to Dansk Olieselskab APS in a deal that will end Shell’s downstream presence in Denmark (OGJ Online, Sept. 15, 2016).

• A recently inked deal to sell its Australian aviation fuels division for $250 million to Viva Energy Australia Pty. Ltd., which follows the 2014 sale of its other Australian refining and fuels businesses—including the 118,000-b/d Geelong refinery near Melbourne—to Viva for $2.9 billion (OGJ Online, Dec. 19, 2016).

• The sale of other downstream operations in the UK, Italy, Egypt, Spain, Greece, Finland, and Sweden (OGJ Online, Feb. 21, 2014).

Port Dickson refinery

In February, SHP said it would execute a series of projects to expand, reconstruct, and upgrade the Port Dickson refinery after formally acquiring the plant (OGJ Online, Feb. 1, 2016).

Intended to bring the plant into compliance with regulatory requirements, optimize its product mix, and strengthen SRC’s overall position as a long-term, leading regional refined products supplier to Malaysia, the planned refinery upgrades specifically will involve work needed to enable a production slate of products that meet Euro 4M and Euro 5-quality specifications.

Contact Robert Brelsford at rbrelsford@ogjonline.com.

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