Shell said that the companies have agreed upon a purchase price of $875 million, including working capital, which is expected to be approximately $400 million. Shell and Petroplus will now discuss detailed terms, including developing a processing arrangement for the production of specialty products such as lubricants.
The two refineries have a combined capacity of 220,000 barrels per day. Shell said that once the sale is completed, the company will continue to serve its customers in France in a range of businesses, including retail, commercial road transport, lubricants and liquid petroleum gas.
While the Petit Couronne refinery produces approximately 40% middle distillates and 20% gasoline, the Reichstett Vendenheim refinery produces approximately 45% middle distillates and 20% gasoline.
Petroplus intends to enter into certain agreements with Shell to supply Shell’s France-based retail and other businesses. The off-take agreement will provide for approximately 30% of gasoline and middle distillates along with the bitumen and lubricants produced at these refineries, the Swiss refiner said.
The deal is consistent with our strategy of ‘more upstream, profitable downstream’, where we aim to focus and simplify the portfolio of the downstream business to those areas that give us the best returns and allow us to use capital to invest in growth markets. said Rob Routs, executive director of oil products and chemicals at Shell.
Karyn Ovelmen, CFO of Petroplus, added: The refineries provide a 38% increase in refining capacity to the company, further geographic diversity and additional high-sulphur crude processing capability with production focused on the middle of the barrel.
The sale is subject to staff consultation and regulatory approval, but the companies hope to complete the transaction during 2008 after all agreements have been finalized.
