Shell Selling German Refinery to Private Equity Fund

LONDON (Reuters) – Royal Dutch Shell (RDSa.L) has agreed to sell its Heide refinery in Germany to UK private equity fund Klesch & Co for an undisclosed sum, both companies said on Friday.

“Shell and Klesch today announced a binding agreement for the sale of the Heide refinery, associated chemicals, bitumen and distribution infrastructure as well as related marketing businesses to Klesch for an undisclosed purchase price,” the fund said in a statement.

“The deal, which is subject to regulatory approval, is expected to close before the end of the year.”

The German refinery can process 4.5 million tonnes of crude per year, or roughly 93,000 barrels of crude oil per day (bpd).

The sale will be the first refinery deal since French major Total’s (TOTF.PA) sale of a part of its Dutch Vlissingen plant to Russia’s Lukoil in June last year. (LKOH.MM)

A sharp fall in fuel consumption in Europe and import demand from key markets such as the United States slashed profitability of oil refining business in the region since late 2008, putting at least 11 refiners up for sale, including the Heide site and Petroplus’ Teesside in the UK. (PPHN.VX)

The Teesside plant has been forced to shut down, having failed to find a buyer.

Shell also has been looking for buyers for other refineries in Europe as a part of its plan to divest about 15 percent of its global refining capacity.

The deal means Inida’s Essar Energy (ESSR.L), which had been initially interested in buying Shell’s three refineries altogether, including Heide, has given it up for Klesh as it lost the exclusivity in negotiation with Shell in April. 

But Essar still remained in talks with two other.

“Shell has an ongoing divestment programme and we are in negotiations to sell Shell Stanlow in the UK and Harburg in Germany,” a Shell spokesman said.

“We are in a non-exclusive talk with Essar for the potential sales of Stanlow and Harburg.” (Reporting by Ikuko Kurahone and Pratima Desai)