Shell (RDS.A) to Divest its 37.5% Stake in German Refinery

Source Press Release
Company Royal Dutch ShellVaro Energy B.V. 
Tags Deal Rumours
Date December 19, 2016

Integrated energy major Royal Dutch Shell plcRDS.A and leading refining firm VARO Energy recently reported that they are in advanced discussions regarding the divestment of Shell's 37.5% interest in the PCK Refinery in Schwedt, Germany. The PCK Refinery has the capacity to refine 220,000 barrels of oil per day.

The value of the deal has not been disclosed as yet. However, Shell expects the deal to help it focus its downstream activity on areas where it can be most competitive. VARO Energy, on the other hand, believes that this deal will enable it to expand geographically to the northern and eastern part of Germany, as well as further optimize its fuels value chain.

VARO Energy - a joint venture between oil trader Vitol and P-E firm Carlyle Group - refines, stores and distributes oil products for the North West European market.

Shell, which is headquartered in Hague, the Netherlands, is one of the largest integrated oil and gas companies in the world. It explores for and extracts crude oil, natural gas and natural gas liquids. It has interests in chemicals as well as power generation and renewable energy.

Shell intends to divest as much as $30 billion by exiting operations in five to 10 countries. It has, however, made relatively slow progress in this regard as the oil price rout dampened buyer enthusiasm for deals at the prices Shell is targeting. In 2016, Shell sold or agreed to sell around $6 billion of assets.

The Anglo-Dutch group's divestment plans are targeted to weather the more than two-year downturn in oil prices and to improve its financials post the  BG Group acquisition.



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