Shell and RWE-DEA, the oil subsidiary of RWE, agreed last week to merge their petroleum products operations in Germany into a 50/50 joint venture, which will also include RWE-DEA's petrochemicals activities in the country.
Under the deal, Shell will be able to take majority control of the venture, to be called Shell & DEA Oil GmbH, by acquiring an additional 1 percent stake in 2004. RWE will also have an option then to sell the whole of its remaining shares in the project to Shell.
The new company will be comprised of four wholly owned refineries with crude oil refining capacity of 34 million tons a year, making it the largest refiner in Germany, and 2.5 million tons per year of base chemicals and petrochemicals. Some aromatics capacity at Shell's Godorf refinery will also be part of the venture.
"RWE-DEA is a bulk chemicals supplier operating from large integrated sites," says a Shell spokesperson. "This fits in with our strategy of having base chemicals operations close to the refineries."
The main petrochemicals operations of RWE-DEA are at Wesseling, near Cologne, where it has a 500,000 ton-per-year ethylene cracker and aromatics plants with around 400,000 tons per year in capacity. It also has a 400,000-ton-a-year methanol unit at the site as well as 45,000-ton-per-year dimethyl ether facility. At Heide, northern Germany, RWE-DEA has an 85,000-ton-per-year ethylene cracker and around 200,000 tons per year of aromatics capacity.
The venture will also take over RWE-DEA's minority stakes in the refineries at Schwedt, close to the Polish border, and at Miro in southern Germany. These have petrochemicals capacity of around 1.1 million tons per year.
The chemical products of the joint venture will be marketed by Deutsche Shell Chemie. As a result, Shell will be, for the first time, involved in the European market for methanol and dimethyl ether.
Shell's German chemicals operation already markets the non-captive output from the two ethylene crackers at Wesseling of Basell, the polyolefins joint venture of Shell and BASF. The crackers, formerly owned by Shell and with a total capacity of 980,000 tons per year, were transferred to Basell last year.
RWE, which sold its Condea chemicals operation to Sasol earlier this year, is pulling out of petroleum products and petrochemicals to concentrate on its four core businesses of electricity, water, gas and waste management. However, it is staying in the upstream oil production and exploration sector.