Shell sold off its remaining chemical assets at Singapore as part of a recent effort to streamline operations and divest less profitable parts.
Glencore, the commodities group and Chandra Asri, an Indonesian chemicals firm, will assume the physical assets and the commercial contracts of the refinery and chemicals assets on Pulau Bukom Island and Jurong Island, Singapore.
Pulau Bukom’s assets include Singapore’s first refinery, which produces 237,000 bbls of oil a day, and a facility that produces 1.1 tonnes of ethylene per year. Jurong Island, on the other hand, is Shell’s largest petrochemical export and production centre in Asia Pacific. Around 1,600 people are employed by the businesses. The deal’s value was not disclosed.
Last year, the assets were subjected to a strategic review as part of Wael Sawan’s broader initiative, which aims to concentrate investment in areas that are more profitable.
Sawan, 49 years old, has promised to be “ruthless” in his focus on performance. He is also overhauling the low-carbon strategy of the group as he attempts to close an valuation gap with their more oil-focused American counterparts.
The company set a return target of 12 percent for its chemical and product business.
The company wrote down the value for the refinery facilities on Jurong Island in December last year due to a weaker economy and a decline in the ethylene markets in Asia. The impairment accounted a large part of the $1.7 billion in markdowns that the FTSE 100 Group booked for its fourth quarter results.
Huibert Vigeveno is a director in Shell’s downstream business. He said, “This agreement is a major step forward for Shell as we continue to upgrade our chemicals and product business. It also demonstrates our commitment to deliver greater value while reducing emissions, which was outlined during our capital markets event last year.”
The shares fell by 3 1/2p or 0.1 percent to £28.911/2. This is a decline of 0.1 percentage points.