Essar Eyes Shell Refineries


Royal Dutch Shell said Friday that its efforts to sell two German refineries and a third in the United Kingdom have narrowed and that it is now negotiating with a single potential buyer, Indian conglomerate Essar. Two of the refineries have base oils plants – one in Harburg, Germany, the other in Stanlow, U.K.

Shells statement noted that the discussions with Essar have no timetable and that there is no guarantee they will result in a sale.

Essar Group, which is based in Mumbai, has operations in the steel, energy, telecommunications, shipping, construction, mining and retail industries. Subsidiary Essar Energy currently owns two refineries, but neither makes lubricating base oils.

Shell spokesman Rainer Winzenreid confirmed yesterday that other companies had previously expressed interest in the refineries but said Shell is now talking only to Essar. Refinery employees may welcome the news because it poses the possibility of a sale to a refiner that is likely to continue operations.

The Harburg base oil plant has capacity to make 3,300 barrels per day of paraffinic API Group I base stocks and 3,000 b/d of naphthenics. The Stanlow base oil plant has capacity of 5,060 b/d of Group I. The second German refinery is in Heider and does not make base stocks. Also up for sale is a Montreal refinery with a 2,700-b/d Group I plant, but Shell did not say Essar has any interest in that facility.

Earlier this year Shell announced it was putting all four refineries on the sales block as part of an effort to optimize operations. The company said it could close the German refineries or turn them into other types of operations, such as depots, if no buyer is found. But it promised to keep operating Stanlow if it is not sold.

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