Shell taps Goldman Sachs to explore S’pore refinery sale, China’s Sinopec said to be keen: Sources
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SINGAPORE - Shell is considering a sale of its Singapore refining and petrochemical plants as part of a broader strategic review and has hired investment bank Goldman Sachs to explore a potential deal, said several sources close to the matter.
Companies that are reviewing Shell’s Singapore assets include Asia’s largest refiner, China’s Sinopec, as well as global trading companies Vitol and Trafigura, the sources said.
The global energy major’s new chief executive Wael Sawan is targeting spending cuts over the next two years to boost profitability, while remaining committed to achieving net-zero emissions by 2050.
Those efforts include the review of energy and chemicals assets on Singapore’s Bukom and Jurong islands,
“Our strategic review is ongoing, and we are exploring several options including divestment,” a spokesman for Shell told Reuters on Wednesday.
Singapore’s position as a regional trading and marketing hub remains important, she added.
For trading companies, the site is seen as a potential oil storage and distribution hub, some of the sources said.
Goldman Sachs, Sinopec and Vitol declined to comment, and Trafigura did not immediately respond to a request for comment.
People with knowledge of Sinopec’s internal affairs said the Chinese refining giant was interested in Bukom for the exposure it can provide in the Singapore market, Asia’s No. 1 pricing, trading and distribution hub for oil products such as gasoline and diesel. They could not be identified due to company policy.
According to people with direct knowledge of the review, discussions with interested parties are in the very preliminary stages, and Shell has yet to make a final decision on the fate of the assets.
The refinery could be sold for a nominal fee, the people said, though a buyer would take on the plant’s liabilities including possible carbon taxes, which together could run past US$1 billion (S$1.35 billion).
Sinopec, as well as another company that received details of the pricing structure, said there were concerns about the level of uncertainty and risk around the carbon component.
Should it bid and succeed, Sinopec would not be the first Chinese state oil company to bet on Singapore. In 2009, PetroChina acquired a stake in Singapore Petroleum Company, which currently runs a joint-venture oil refinery in the city-state with Chevron.
The Bukom refinery, Shell’s only wholly owned refining and petrochemicals centre in Asia, can process 237,000 barrels per day of crude. Built in 1961, it is Singapore’s first refinery.
The complex also houses a one million tonnes per year (tpy) ethylene cracker and a 155,000 tpy butadiene extraction unit. These are integrated with a monoethylene glycol plant at Shell’s petrochemicals site on Jurong Island.
In March, Shell decided not to proceed with two projects
Meanwhile, Singapore has ambitions to achieve net-zero emissions by 2050. REUTERS, BLOOMBERG
