Shell strikes $2.9 billion deal to sell Geelong refinery and 870 petrol stations

JOHN DAGGE
FEBRUARY 21, 2014
HERALD SUN
Shell has sold its Geelong refinery as part of a $2.9 billion deal.
THE new owners of Shell’s Geelong refinery say they intend to keep it running.
Oil giant Royal Dutch Shell today announced it was selling its 870 Australian petrol stations and the refinery in a deal worth $2.9 billion.
The buyer is Swiss-based group Vitol, the world’s biggest oil trader.
Under the deal, the petrol stations will keep the Shell brand.
Vitol spokeswoman Andrea Schlaepfer said the group did not have plans to convert the refinery to a fuel import terminal — a process that would have cost more than 400 jobs.
“The intention is to keep it going,” Ms Schlaepfer said.
Vitol said the jobs of 450 permanent employees and 150 contractors at the refinery were safe.
Industry experts had raised serous doubts that any buyer would keep the ageing refinery open given the pressure it faced from “mega refineries” in Asia.
Today’s announcement breaks a string of bad news for Geelong on the jobs front after Alcoa and Ford announced they were pulling out.
Vitol chief Ian Taylor said it was an exciting deal for the Swiss-based company.
Shell global chief executive Ben van Buerden says Australia “remains important” to the oi
Shell global chief executive Ben van Buerden says Australia “remains important” to the oil giant.
“Australia is a growing economy and we look forward to working with the management team to strengthen and grow the business,” Mr Taylor said.
Shell’s branding will remain across the service station network and Vitol will become the exclusive distributor for Shell lubricants.
The deal does not include Shell’s aviation business or the company’s lube oil blending and grease plants in Brisbane that will be converted to bulk storage and distribution facilities.
Shell chief Ben van Beurden said Australia remained important to the global oil giant, but the company was making tough choices to improve its overall competitiveness.
“Our customers will continue to benefit from the quality associated with the Shell brand and we are confident Vitol will invest in and grow the business,” he said.
Vitol was earlier rumoured to be the favourite to buy the Shell assets in a consortium with sovereign wealth fund the Abu Dhabi Investment Council.
Shell has had its Geelong refinery on the market since last April, and later broadened the sale to include the Australian petrol stations.
The sale is part of Shell’s reported wider plan under Mr van Beurden to offload up to $US15 billion ($16.7 billion) worth of assets worldwide in the next two years.
It is understood Shell told its refinery workers of the deal this morning.
A statement from Shell said it expected the majority of its downstream workers — those not involved in oil exploration and production — to keep their jobs under the new owners.
Shell, which has a partnership with supermarket operator Coles in Australia, in January sold $1.3 billion of stakes in Australian natural gas assets to a Kuwaiti state company.
Shell has recently offloaded refineries in the UK, Germany, France, Norway and the Czech Republic, and downstream businesses in Egypt, Spain, Greece, Finland and Sweden.
It also created a downstream joint venture with Vitol and other partners across Africa, and sold some downstream businesses in Italy and Norway.
For the Australian assets, Vitol beat a rival bidding consortium made up of local investment bank Macquarie Capital and powerful miner-trader Glencore Xstrata.
with AAP