Shell Refineries Face Uncertain Future

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Royal Dutch Shell continues to negotiate with Essar for the potential sale of three European refineries, but it has also reopened such talks with other companies. Two of the refineries – one in Harburg, Germany, the other in Stanlow, United Kingdom – include base oil plants.

Shell spokesman Rainer Winzenried confirmed Monday that the company is entertaining discussions with other companies, even as it continues talks with Indian refiner Essar Oil. Other news organizations first reported the widening of negotiations after comments by Shell Chief Financial Officer Simon Henry on April 28.

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An Essar spokesman also confirmed yesterday that it is still discussing a possible purchase. Shell has declined to identify any other companies that have expressed an interest. Winzenried did indicate that price has been the major sticking point.

As our CFO said, we have certain ideas about the price, and we wont sign a contract for anything that is not close to that, he said.

Shell said last year that it would try to sell the Harburg and Stanlow refineries – plus a third in Heide, Germany – in order to streamline operations. The Harburg base oil plant has capacity to produce 3,300 barrels per day of API Group I base oils, plus 3,000 b/d of naphthenic base oils. Capacity at the Stanlow plant is 5,060 b/d of Group I.

Winzenried repeated previous statements that it may close the refineries or convert them to other uses such as terminals if it does not find a purchaser. He added that the company has not set a deadline for reaching an agreement.

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