Shell Considers Selling its Chemical and Refining Asset

International energy conglomerate, Shell, is contemplating the divestiture of its refining and chemical assets in Singapore. This move is part of a comprehensive strategic review of the company's operations, as confirmed by a company spokesperson.

He added that their strategic review is underway, and they are afoot on the exploratory phase which includes divestment.

Earlier in June, Shell’s CEO, Wael Sawan, alluded a forthcoming in-depth evaluation of the company’s establishments in Singapore, specifically at Pulau Bukom and Jurong Island sites. The motive behind this review aligns with Shell's vision of revamping its global energy and chemical parks to accommodate more eco-friendly, low-carbon solutions.

The spokesperson further elucidated the reasons behind the review, stating it was a continuation of Shell Group's consistent efforts over the years to refine its Chemicals and Products portfolio. Current market adversities and an intensified focus on capital discipline have also been influential factors.

However, the spokesperson was keen to emphasize the strategic significance of Singapore in Shell's global operations. “Singapore’s position as a pivotal trading and marketing hub, especially to cater to our customers in the region, remains undiminished,” they said.

Highlighting Shell's current capabilities in Singapore, the company's Pulau Bukom-based cracker boasts an ethylene production capacity of 1.15 million tonnes annually. The sites in Singapore also produce an array of products, including ethylene oxide, ethylene glycol, butadiene, benzene, and lubricants, among others.

In terms of potential divestment activities, recent reports from news agency Reuters, dated 23 August, suggest that investment banking giant Goldman Sachs has been enlisted by Shell to examine the prospects of a deal concerning its Singaporean assets. The report also mentioned potential interest from major companies, including China's Sinopec and global trading firms like Vitol and Trafigura. However, when queried about these potential buyers, Shell’s spokesperson refrained from commenting on Reuters' claims.

According to Procurement Resource, Shell's consideration of divesting its refining and chemical assets in Singapore signifies a strategic pivot in line with global trends towards sustainable energy solutions. While the company acknowledges Singapore's continuing importance in its global framework, market dynamics and a refocused business strategy are driving these potential changes. The involvement of notable entities like Goldman Sachs and potential interest from major industry players underscores the significance of these assets in the energy sector. As the situation develops, stakeholders will be watching closely for definitive moves and decisions from Shell.