Shells lubricant business in the United States said yesterday that it has exercised an option to sell a lubricant blending plant in North Charleston, S.C., to Chevron. Contrary to a local newspaper report, SOPUS Products said it has no plans to close the facility.
Shell acquired the option along with the plant when it bought out Texacos stake in the former Equilon Enterprises LLC, originally a U.S. downstream joint venture between Shell, Texaco and Saudi Refining Inc. Texaco had to sell its interest to satisfy Federal Trade Commission conditions for Chevrons 2001 purchase of Texaco.
A Shell spokeswoman said the option on the North Charleston plant gives Shell until the end of this year to require Chevron to buy it at a pre-arranged price, which was not disclosed. She added that Shell decided to execute the option because other developments reduced the plants usefulness to Shell.
To better serve our customers and sustain a competitive cost structure, SOPUS Products long-term strategy is to optimize its U.S. lubricant network, Tricia Elwell Singer told Lube Report.Consolidating proprietary plant capacity and increasing utilization of contract packagers and blenders helps us achieve this goal.
Shell has not yet given formal notification to Chevron but said it plans to complete the transaction before the end of the year. The plant employs 78 workers.
The Charleston Post and Courier reported last week that Shell intends to close the plant. Indeed, records filed by Shell with the South Carolina Department of Commerce say the plant will close Dec. 15, but Ellwell Singer maintained that the filing does not reflect any closure planned by Shell or knowledge of plans by Chevron. Instead, she said, Shell made a precautionary filing under U.S. labor laws because it does not know what will happen.
Basically what weve done is taken a very conservative approach by looking at what the worst-case scenario would be, she said.
The filing is listed on a website devoted to notices made under the federal Worker Adjustment Retraining Notification Act, which requires employers to disclose plans that will result in layoffs above a minimum level.
A Chevron spokeswoman said the company has not received formal notice of Shells plan to execute the option and therefore has no plans for the facility.