Shell Sheds Aussie Downstream Business


Shell agreed last week to sell downstream operations in Australia to Swiss energy trader Vitol. The transaction includes lubricant sales activities but not lube and grease blending plants, which will be converted for warehousing.

Shell called the sale its latest step to shed less profitable downstream assets. Vitol, on the other hand, saw an opportunity to pick up an attractive business.

This is an exciting acquisition for us, a good company led by an experienced management team and underpinned by the value of the Shell brand, Vitol Chief Executive Officer and President Ian Taylor said in a statement. Australia is a growing economy, and we look forward to working with the management team to strengthen and grow the business.

The lubricant and grease manufacturing plants are located at Pinkeba Terminal in Brisbane. British-Dutch energy giant Shell plans to halt production and convert the plants to bulk storage and distribution facilities, Shell spokesman Ross Whittam said. A timeline has not been set, but the change will probably be complete within a year.

Warehousing facilities in Pinkeba and Newport will be conveyed to an unidentified specialist third-party operator.

Shell said it will continue to supply Australia with lubricants manufactured at its plants in other countries. Vitol will function as Shells lubricant distributor in Australia.

The companies said Vitol will pay Au $2.9 billion (U.S. $2.6 billion) for the purchase, which is much more about other petroleum products such as fuels, bitumen and chemicals. For Shell the deal is in the same vein as other divestments of recent years, including sales of refineries in several European countries and downstream businesses in Europe and Egypt.

Vitol plans to continue operating a Shell refinery in Geelong, a relief to Australian officials who had feared a closure that would have eliminated hundreds of jobs.

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