Shell announced yesterday that it agreed to sell its downstream business in Argentina to Raizen, a 50-50 joint venture with Brazilian sugar producer Cosan. The business is reportedly one of the three largest lubricant suppliers in the Argentinian market.
The agreement calls for Raizen to pay $950 million for assets that include a refinery in Buenos Aires, 645 fuel retail stations and businesses that supply liquefied petroleum gas, marine fuels, aviation fuels, bitumen and chemicals, as well as lubricants.
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The sale was the culmination of a two-year review by Shell of its operations in Argentina and part of a broader plan to divest operations valued at $30 billion.
Argentina is the second-largest lubricant market in South America, far behind Brazil and slightly ahead of Venezuela. Shell said last year that it was the third-largest finished lube supplier in Argentina. The Buenos Aires refinery includes one of the nations two base oil plants, an API Group I facility with capacity to make 1,500 barrels per day.
Raizen is a leading producer of biofuels producer and fuels distributor, and it already managed more than 6,000 Shell service stations in Brazil. Shell officials said the company will serve a similar role in Argentina and that the sales agreement calls for it to continue carrying Shell products.
Shell said Raizen did win a competitive bidding process for its downstream activities. Reuters reported last year that Raizen was leading the competition and published an article yesterday stating that Raizen beat out Argentina energy company YPF SA, Chiles Quinenco SA and China National Petroleum Corps Petrochina.