BS reported that Essar Oil is in talks with Royal Dutch Shell to buy two of its refineries in Germany and one in the UK.
As per report both companies confirmed the exclusive negotiations on the sale of the Heide and Harburg refineries in Germany and the Stanlow plant in the UK. The refining capacity of these refineries is pegged at 500,000 barrels per day.
A Shell’s spokesperson told Business Standard from London that “Shell can confirm that we are in negotiations with Essar for the potential sale of Stanlow, Heide and Harburg refineries. For the time being Shell will not be holding discussions with any third party other than Essar.”
Shell however added that the negotiations do not guarantee a sale and it is too early for Shell to confirm a deal or comment on timescales.
Shell is reviewing the future of its refineries worldwide as it seeks to reduce costs and cut spending after the global recession curbed demand for fuels and dragged down prices. Declining profit margins have prompted refiners to idle plants, seek the sale of others and slow operating rates. The company plans to sell about 15% of its global refining capacity or about 600,000 barrels a day of capacity, in the next three years as part of its restructuring programme aimed at increasing profitability and efficiency. It agreed in September to sell its fuel and lubricant businesses in Greece.
Shell said that “The scope of the current review includes oil products and chemicals manufacturing and distribution terminal, plus the commercial fuels, bulk fuels and local marine fuels businesses.”
