HOUSTON (ICIS)--Shell will sell its interest in the Deer Park Refining Limited Partnership to partner Pemex, while retaining its chemicals operations at the same location, the company said in a release.
Pemex made an unsolicited offer for Shell's 50.005% interest in the refinery, downstream director Huibert Vigeveno said. The joint venture formed in 1993.
The refinery has 340,000 bbl/day crude capacity, processing crudes from Mexico, Canada, the US, Africa and South America, the company said.
Shell will continue to own and operate the adjacent Deer Park chemicals complex, which produces ethylene, propylene, butadiene (BD), aromatics, phenol and acetone.
Selling its stake in the Deer Park refinery was not part of Shell’s efforts to reduce its refining footprint from 14 to six.
Shell listed Deer Park as one of six core sites that are integrated with chemicals and trading: Deer Park; Norco, Louisiana, US; Pernis, the Netherlands; Pulau Bukom, Singapore; Rheinland, Germany; and Scotford, Canada. The company sees these sites as energy and chemical parks.
CEO Ben van Beurden said in the October earnings presentation that the refineries would become integrated with chemicals and increasingly with low-carbon fuels such as biofuels, hydrogen and synthetic fuels.
In the Deer Park announcement, Shell said that the US would remain a key manufacturing hub for the company through:
- Upstream activities in the Permian Basin of West Texas and chemicals operations in Deer Park
- Refining and chemicals site at Norco, Louisiana
- Chemicals facility at Geismar, Louisiana
- Chemicals site in Pennsylvania
- Midstream infrastructure
The Deer Park transaction is valued at $596m, which is a combination of cash, debt and the value of the hydrocarbon inventory at the time of closing based on volumes and prevailing market prices, Shell said. Closing is expected in the fourth quarter.
In related news, Baton Rouge, Louisiana-based American Clean Energy Refining (ACER) is bidding to buy Shell’s Convent site, according to Reuters.
ACER CEO George Dabbs told Reuters that his company offered $1.25bn for the site. If Shell does not sell the refinery, ACER plans to build a new one.
A Shell spokesperson did not comment but did reiterate that Shell is considering all bids.
Thumbnail image shows a Shell gas and storage tank. Image by Shutterstock.