Shell confirmed it has received an offer from Essar Energy to buy its 272,000 barrel-per-day Stanlow refinery and associated local marketing businesses in the UK for a total expected consideration of some $1.3 billion.
In light of Essar’s offer, the two companies today signed an exclusivity agreement until April 1, 2011, under which break fees would be payable if either company fails to sign an asset sales agreement.
Pursuing this deal is aligned with Shell’s strategy to concentrate its global manufacturing portfolio on larger and more sophisticated assets.
In addition to the proposed sale of the assets, which would be expected to close by mid 2011, the two companies would enter into an exclusive five year crude supply contract by Shell to Essar and into long-term agreements for the supply of products in the UK by Essar to Shell.
In 2009 Shell confirmed that it was talking to third parties about the potential sale of Stanlow Refinery and associated local marketing businesses.
The offer from Essar covers Oil Products and Chemicals Manufacturing and distribution terminal assets, plus the Commercial Fuels Bulk Fuels and local Marine fuels businesses associated with the Stanlow refinery, but does not include any of Shell’s UK Retail sites, the Shell higher olefins plant and alcohols units, the lubricant oils blending plant, lubricants marketing business, Shell aviation operations at airports, non-local marine business, marine lubricants, commercial road transport marketing businesses, bitumen marketing business or Shell technology centre Thornton.
In the UK, Shell has a network of more than 900 branded retail sites, and supplies and distributes oil products to a range of airport, Lubricants, Marine and Bitumen customers. The company also has upstream operations in the UK sector of the North Sea and 3 onshore gas plants.