Shell offloads Singapore assets
Shell has sold its remaining chemical assets in Singapore in the latest attempt to simplify operations and sell-off less profitable parts of the business.
Glencore, the commodities group, and Chandra Asri, an Indonesian chemicals company, will take on the physical assets and commercial contracts for the refining and chemicals assets at Pulau Bukom and Jurong Island in Singapore.
The Pulau Bukom assets include Singapore’s first ever refiner, which produces 237,000 barrels a day and a plant that produces 1.1 metric tonnes of ethylene a year, while Jurong Island is Shell’s largest petrochemical production and export centre in the Asia Pacific region. The businesses employ around 1,600 staff. The value of the deal was not disclosed.
The assets underwent a strategic review last year as part of a broader push by Wael Sawan, chief executive at Shell, to focus investment on higher-returning areas of the business.
Sawan, 49, has pledged a “ruthless” focus on performance and is overhauling the group’s low-carbon strategy as he tries to close a valuation gap with its more oil-focused American peers.
The company has set a returns target of 12 per cent for its chemicals and products business.
Weaker economic conditions and a downturn in the ethylene market in Asia pushed the company to write down the value of refining facilities on Jurong Island at the end of last year. The impairment accounted for the majority of a $1.7 billion markdown that was booked by the FTSE 100 group in its fourth-quarter results.
Huibert Vigeveno, a director at Shell’s downstream, renewable and energy solutions business, said: “This agreement marks a significant step in Shell’s ongoing efforts to high-grade our chemicals and products business, and is a testament to our commitment to deliver more value with less emissions, as outlined at our capital markets day last year.”
The shares, which are up 12 per cent since the start of this year, fell 3½p, or 0.1 per cent, to £28.91½.
