Royal Dutch Shell PLC has reached a binding deal to sell its Australian downstream business, excluding aviation fuel and its lube oil blending and grease plants in Brisbane.
The company’s 870 service stations, its 118,000-b/d Geelong refinery near Melbourne, its bulk fuels, bitumen and chemical businesses, and part of its lubricants business will be sold to international fuels company Vitol Group for $2.9 billion (Aus.).
Shell and Vitol expect the deal—which still is awaiting regulatory approvals—to close this year.
Shell’s sell-off of its Australian downstream assets follows the shuttering its 79,000-b/d Clyde refinery at Sydney in 2012 (OGJ Online, June 7, 2012).
Subsequently, the company said that if it could not negotiate a sale of the Geelong plant by 2014, it would consider converting the refinery into an import terminal, as it did with the Clyde refinery (OGJ Online, Apr. 4, 2013).
The deal is part of Shell’s global shift away from downstream operations. It has already sold off refineries in the UK and some mainland European countries as well as made other divestments in Egypt, Spain, Greece, Finland, and Sweden.
Ben van Beurden, Shell’s chief executive officer, said the company is trying to focus on the most profitable opportunities worldwide.
The majority of staff at the Geelong refinery will be retained by Vitol. Part of the deal is a brand agreement whereby the Shell name will continue to be displayed across the country’s downstream network and customers will still have access to Shell fuels and lubricants.
The lube oil and grease plants in Brisbane will be turned into bulk storage and distribution facilities.
Shell has been involved in Australia’s downstream industry for 113 years.
Despite Shell’s withdrawal from the Chevron-operated Wheatstone LNG project in Western Australia in January, the Vitol deal has not affected Shell’s other upstream business, which include participation in the North West Shelf joint venture, the Prelude floating LNG project, and the Greater Sunrise fields.
Shell also has a 23% shareholding in Woodside Petroleum and in the wake of the deal Woodside Chief Executive Officer Peter Coleman has publicly asked Shell for clarification of its intentions on the Woodside register.