ExxonMobil reveals mixed plan to shed, shutter French refining, chemical assets

April 11, 2024
Esso Societe Anonyme Francaise (SAF)—a majority owned subsidiary of ExxonMobil—has entered formal discussions for the sale of its 140,000-b/sd (133,000-b/d) Fos-sur-Mer integrated refinery in the Bouches-du-Rhône region of southern France’s Provence-Alpes-Côte d'Azur.

Esso Societe Anonyme Francaise (SAF)—a majority owned subsidiary of ExxonMobil Corp. (82.89%)—has entered formal discussions for the sale of its 140,000-b/sd (133,000-b/d) Fos-sur-Mer integrated refinery in the Bouches-du-Rhône region of southern France’s Provence-Alpes-Côte d'Azur.

Esso SAF has entered exclusive negotiations to sell its refining and logistics operations in southern France, including the Fos-sur-Mer refinery and Toulouse (Fondeyre) and Villette de Vienne terminals, to Rhône Energies, a consortium of Entara LLC and Trafigura Pte Ltd., the four companies said in separate releases on Apr. 11.

The proposed transaction—which remains subject to a formal information and consultation procedure already underway with Esso SAF employee representative bodies, as well as to regulatory approvals—would include transfer of 310 employees Esso Raffinage and Esso SAF working at the sites to Rhône Energies in accordance with regulations currently in force, Esso SAF said.

The proposed divestments come as part of Esso's long-term strategy in France aimed at maintaining the competitiveness of its operations, while guaranteeing continuity of supply to its customers in the south of France, according to Charles Amyot, chief executive officer and chairman of Esso SAF.

“We are convinced that under the leadership of Rhône Energies and thanks to its support, the teams will continue to work tirelessly to supply the energy products needed on the market while continuing the site's commitment to the energy transition,” said Amyot.

Following the proposed sale, Esso SAF said it will continue supplying customers in throughout the region with fuels and specialty products such as lubricants, base oils, and bitumen, from its 244,000-b/sd (231,800 b/cd) Notre-Dame-de-Gravenchon refinery in Port-Jérôme-sur-Seine, Normandy, in northern France.

Under terms of the proposed acquisition—financial details of which remain confidential—Trafigura said it would enter into a minimum 10-year exclusive crude oil supply and product offtake agreement, including ownership of crude oil and product stocks in tank, to ensure the refinery has a secure supply of on-demand feedstock at competitive costs, as well as a reliable off-taker of refined products destined to the domestic market.

Upon completing the acquisition, Rhône Energies said it plans to further improve the refinery’s margin capture, crude flexibility, and process utilization, and to invest in sustainability of the site to reduce its carbon intensity footprint.

Rhône Energies confirmed additional investments into the refinery would entail growth projects to enable further co-processing of biogenic feedstocks for production of renewable fuels.

Completion of the proposed transaction is anticipated by the end of 2024, the parties said.

Shuttering of Gravenchon chemical operations

Announcement of Esso SAF’s proposed divestment of the Fos-sur-Mer refining and logistics assets comes on the same day as ExxonMobil’s 100%-owned ExxonMobil Chemical France (EMCF) revealed its plan to permanently close the primary chemical production unit at its Gravenchon site co-located near Esso SAF’s Gravenchon refinery in Port-Jérôme-sur-Seine.

Following more than €500 million in losses since 2018, EMCF aims to shut down its Gravenchon steam cracker—which produces 400,000 tonnes/year (tpy) of ethylene—as well as related derivatives units and logistics installations, the operator said.

“Despite efforts to reduce costs and improve the site’s economics, [the site] not competitive in the market…[as] configuration of the steam cracker, its small size compared to newer units, high operating costs in Europe, and higher energy prices make it uncompetitive,” ExxonMobil said.

Anticipated to occur in 2024 but still subject to relevant government approvals, the proposed closure would result in the loss of 677 ExxonMobil jobs in France that would be reduced over time through 2025. No employment separation is considered before 2025, the company said.

As part of the proposed shuttering, ExxonMobil said it plans to close associated buildings, decommission equipment, and over time, fully remediate the site.

A separate entity, the Esso Gravenchon refinery in Port-Jérôme-sur-Seine, remains financially stable, and in current market conditions, will continue to operate and supply France with fuels, lubricants, basestocks and asphalt, ExxonMobil confirmed.

Regarding the impacted workforce, the operator said it will initiate its search for individual and collective solutions following consultation with applicable works councils, and enhanced support measures aimed at helping employees finding new jobs will be made available.

In the meantime, ExxonMobil said it is already contemplating options for how it can assist in creating possible new uses for the lands made available following remediation of the chemicals manufacturing site.

In addition to ethylene, EMCF’s Gravenchon complex also produces 400,000 tpy of polyethylene and 300,000 tpy of polypropylene, according to ExxonMobil’s 2023 annual report to investors.