Shell sells Malaysia refining business

SHELL has agreed to sell its 51% stake in its Malaysia refinery in Port Dickson as it continues to refocus its downstream operations.

It has sold the stake in Shell Refining Company (SRC) for US$66.3m to Malaysia Hengyuan International, a unit owned by private Chinese refiner Shandong Hengyuan Petrochemical Company. Shell said in a statement that the new owner remains committed to upgrading the refinery so the fuel produced meets the Euro 4M and Euro 5 fuel emissions standards.

Shell has been seeking a buyer for the Port Dickson refinery since last year as part of a wider effort to concentrate its global downstream activities where it can be most competitive. The sale price values the firm at 36% of its listed value before the deal was announced.

SRC is independent to Shell’s other operating units in Malaysia, including its gas-to-liquids facility in Bintulu. It emphasised in a statement that despite the sale, Malaysia remains important to the group where it is a leading provider of fuels and lubricants, and has agreed a long-term offtake deal for the 156,000 bbl/d Port Dickson refinery to continue supplying feedstock to its other downstream businesses. The site products include gasoline, diesel, jet fuel, LPG and propylene.

The restructuring follows wider industry trends to refocus activities and cut costs in the wake of the fall in oil prices. Shell announced last year that thousands of jobs would be cut in Malaysia and across the group as it seeks to cut costs and prepare for a merger with BG Group.

Recent downstream sales include the sales of businesses in Australia and Italy along with retail sites in the UK.