At the same time, Shell said it will keep and continue operating its Stanlow, U.K., refinery if it fails to find a buyer by the end of February. The Stanlow complex, which also includes a base oil plant, has been on the sales block since 2009, as was the Harburg refinery and a third refinery in Heide, Germany. British-Swiss investment firm Klesch and Co. agreed in August to buy the Heide refinery, which does not make base oils.
The Harburg refinery is being converted into a storage terminal, Shell spokesman John French said yesterday. Until that happens, in the second quarter of 2012, it will be business as usual.
Indian conglomerate Essar had been in discussions about purchasing all three refineries for well over a year. We are still in discussions, Essars Joint General Manager for Corporate Communications Swastayan Roy said. The only difference now is that those discussions only involve Stanlow.
Shell spokesman French said the main part of the Harburg refinery is no longer for sale but that the company is still negotiating the potential sale of its base oil plant. At least one observer suggested such a sale is likely.
The Harburg [base oil] plant is already separate from the main part of the refinery – its across the River Elbe – so its not like they would have to carve out an operation from within the middle of the refinery, Ames added. It would actually be pretty neat and clean.
The Harburg base oil plant is unusual in that it produces both paraffinic and naphthenic base oils. It has capacity to make 3,300 b/d of the former and 3,000 b/d of the latter. The Stanlow plant has capacity to make 5,060 b/d of paraffinic base stocks.
Shell had suggested last year that it might convert or close the Harburg refinery if it did not find a buyer. Ames said the writing was on the wall the past few months, given the sale of the Heider refinery, which supplied vacuum gas oil to Harburg, and the sale of Shells metalworking fluid and food-grade lubricant businesses, both of which used base stocks from Harburg.
This is not a surprise if you look at what Shell has done the past several months,Ames said. It has been monetizing the value of assets connected to Harburg.