EU Consents to Nynas Takeover


The European Commission has approved Nynas proposal to acquire the base oil production units at Shells Harburg refinery in Hamburg, Germany, an acquisition which will increase the Swedish companys naphthenic output by 40 percent.

The approval is the outcome of an in-depth investigation launched over concerns that the takeover would leave Nynas as the only producer of naphthenic base oils, process oils and transformer oils in the European Economic Area. Harburg has capacity to make 3,000 barrels a day of naphthenics and 3,300 b/d of API Group I base oil.

The commission found that the transaction would not raise competition concerns. During the investigation, Shell demonstrated that it would not continue to operate the refinery, and the commission found that due to the lack of any alternative buyers, the plant would likely be shut down if Nynas did not take it over.

The result would be a near absence of European production of these specialty oils, causing the region to look to higher-priced imports to meet demand, according to a Sept. 2 press release from the European Commission. If this acquisition did not take place, the Harburg plant would simply close down, dramatically reducing production capacity in Europe for a number of specific oil products, said the commissions vice president in charge of competition policy, Joaquin Almunia. We authorized this acquisition because it is the only way to avoid a price increase for consumers.

Nynas expects to begin taking possession of the assets in stages, beginning on Jan. 1, 2014. It will first begin operating the base oil unit and associated refining facilities, including bitumen assets, tank farms and jetties on the southern part of the Harburg site. Nynas will absorb 90 Shell employees at that time, and add on more to total 220 by 2016.

In a Sept. 2 press release, Nynas said Harburg will become a core site, with annual production of 350,000 metric tons (6,600 b/d) of specialty oils. We will increase volumes of all products in our current range of naphthenic specialty oils, said Staffan Lennstrom, CEO of Nynas. Over the next 24 months, he said, Harburg will be converted to a stand-alone specialty oil refinery. A hydrogen production plant will be built and operated by a third-party supplier, and Nynas then will begin modifying the sites northern section.

Nynas and Shell originally announced the sale in December 2011, and neither has disclosed the price of the transaction. Under the deal, Nynas agreed to not take over any of Shells customers, sales or marketing assets. For its part, Shell moved earlier this year to end crude processing at the 110,000 b/d refinery, and already has converted Harburgs fuels operations into an oil products terminal.

Nynas is the worlds second-largest supplier of naphthenic base oils, with a 7,800 b/d naphthenic plant in Nynashamn, Sweden, and long-term agreements in place to sell naphthenic base oils produced by PdVSA in Emmastad, Netherlands Antilles, and Valero in Three Rivers, Texas. Naphthenic capacity at those facilities is 3,700 b/d and 2,400 b/d, respectively. Only Ergon Inc., with 22,000 b/d of pale oil capacity in Vicksburg, Miss., has a larger share of the global naphthenics market.

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