Shell has reached an agreement to divest its refinery and petrochemical assets located in Singapore, a key oil hub in Asia. The sale involves transferring Shell’s interest in Shell Energy and Chemicals Park Singapore to a joint venture company known as CAPGC, majority-owned and operated by Indonesia’s Chandra Asri Group and minority-owned by Glencore Asian Holdings, a subsidiary of Swiss commodities trader Glencore.
The assets being sold include a refinery with a capacity of processing 237,000 barrels per day (bpd) of oil, an ethylene plant capable of producing 1 million metric tonnes per year (tpy), and a mono-ethylene glycol plant. These facilities are situated on Bukom island and Jurong island in Singapore.
This decision by Shell aligns with CEO Wael Sawan’s strategy to reduce the company’s carbon footprint and prioritize profitability. It comes after Goldman Sachs was hired by Shell last August to explore potential divestments of its refining and petrochemical plants globally.
While the acquisition provides Chandra Asri Group with access to naphtha feedstock for its cracker and enables integration of petrochemical production with refining, Glencore stands to gain a foothold for its trading activities in Asia. However, buyers may face challenges from newer refineries in China and elsewhere, as well as Singapore’s escalating carbon tax.
The sale process saw CAPGC and Vitol emerge as final bidders, following the withdrawal of shortlisted Chinese firms including China National Offshore Oil Corp (CNOOC). For Glencore, this transaction represents a strategic move to expand its presence in the Asian market, complementing its existing refining assets in Cape Town, South Africa, and a lubricants plant in Durban.
