Shell sells Stanlow refinery to Essar Oil (UK)
Shell has signed a sales and purchase agreement for its 270,000 bpd Stanlow refinery in the UK and certain associated local marketing businesses with Essar Oil (UK) Ltd. for a total expected consideration of some $1.3 billion. Today’s announcement follows a formal offer Essar made for Stanlow in mid-February.
The proposed sale covers oil products, chemicals manufacturing and access rights to certain distribution terminal assets, plus the commercial fuels, bulk fuels and local marine fuels businesses associated with the refinery. It 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 the Shell technology center at Thornton.
It is expected that the transaction, which is subject to certain conditions precedent, will be completed during the second half of 2011.
“The decision to sell Stanlow is part of our drive to concentrate our global manufacturing portfolio on larger assets and, on completion, means we will have reduced our global refining exposure through a combination of asset sales and closures by a total of 1.6 million barrels since 2002,” said Shell’s Downstream Director Mark Williams.
“This deal serves Stanlow’s future well given Essar’s commitment to investment and intent to increase site throughputs,” said Frank Willsdon, Stanlow general manager. “It can only benefit staff, business partners and the local community and region. After our many years with Shell, we now look forward to a smooth transition and moving forward with Essar.”
In addition to the sale of the assets, the two companies will 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.
Background. Stanlow, which is near Ellesmere Port, Cheshire, employs 960 people and is the UK’s second largest oil refinery, producing around one sixth of the UK’s petrol. The Stanlow refinery accounts for around 15% of production from UK refineries overall. It produces approximately 3.5 billion liters of petrol a year. Its other main products are diesel and kerosene, used for aircraft fuel.
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 three onshore gas plants.
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