Shell May Sell Singapore Refining


Prospects for the future of Shell’s Singapore base oil plant have taken another turn as the company now is considering selling the refinery that contains it.

After announcing earlier this year that it was scrapping consideration to upgrade the base oil plant to make API Group II stocks, the British energy giant said in June that it would consider selling the fuels refinery along with nearby petrochemical facilities.

This week Reuters and other news outlets reported that the company has engaged Goldman Sachs to explore a potential sale and that several potential buyers had expressed interest.

Shell reportedly has not made a final decision about whether to sell the facilities, and a spokesman for the company referred to a position stated June 14 at its Shell Capital Markets Day 2023 telecast from New York.

“Our strategic review is ongoing and we are exploring several options, including divestment,” officials said then.

Shell’s Singapore refining and petrochemicals complex consists of a fuels refinery and petrochemicals production on the island of Pulau Bukom and more petrochemicals refining on larger nearby Jurong Island. The Pulau Bukom fuels refinery includes a base oil plant with capacity to make 386,000 metric tons per year of Group I base stocks.

Prospects for the base oil plant have taken several turns the past few years. In 2020 Shell said the base oil plant would close in 2022 as part of a broader plan to reduce crude oil throughput capacity of the overall refinery in order to reduce greenhouse gas emissions. In February 2022 officials disclosed that they were considering introduction of biofuels production and upgrading the base oil plant to make Group II.

In March of this year, however, the company said the upgrade and biofuels production were no longer being considered.

Shell says it is considering disposing its Singapore facilities for several reasons. First, the company regularly reviews performance of assets around the world – a practice that has led to divestment, closure and conversion of numerous facilities in the past couple decades.

The company is now redoubling such scrutiny as part of an initiative to reduce its global carbon dioxide emissions and focus on production of materials with higher profit margins. In addition, market conditions are now challenging for the facility.

Although it is considering disposing of its refining operations, Shell said Singapore remains in important trading and marketing hub, suggesting it will retain such operations in the island nation.

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