By Trixie Yap
SINGAPORE (Reuters) – Oil giant Shell said on Wednesday it had agreed to sell its Bukom refinery in Singapore – one of the world’s largest oil refining and trading hubs – to a joint venture of Indonesian chemical company PT Chandra Asri and global trading company Glencore. , the culmination of a process that began last year.
Here are the key details and what’s next:
WHY IS SHELL SELLING ITS “CROWN JEWEL” REFINERY IN SINGAPORE?
The sale of the resort, which opened in 1961, is part of CEO Wael Sawan’s plan to reduce the company’s carbon footprint and focus on its most profitable businesses.
Last year, Shell announced it was conducting a strategic review of its assets in Singapore.
WHO ARE THE BUYERS?
Chandra Asri is a majority shareholder in the joint venture with Glencore, called CAPGC Pte. Ltd.
Chandra Asri operates Indonesia’s only naphtha cracker, capable of producing 900,000 tonnes of ethylene and 490,000 tonnes of propylene each year, which are basic raw materials processed into other petrochemical products. It is a joint venture between several Thai and Indonesian companies, including Siam Cement Group, Thai Oil and PT Barito Pacific.
Glencore is a Swiss producer and distributor of raw materials such as copper, cobalt, zinc, nickel and ferroalloys. It markets aluminum, alumina and iron ore, as well as petroleum and petroleum products.
WHAT IS SOLD?
Shell’s Bukom refinery complex includes several crude distillation units with a total processing capacity of 237,000 barrels per day (bpd) and a one million tonne per year steam cracker.
Its Jurong Island plant has an 800,000 tonne per annum steam cracker and other petrochemical derivative units making products such as monoethylene glycol and styrene, which are key raw materials for the polyester and plastics industries.
The deal is expected to be finalized by the end of the year, pending regulatory approval.
HOW WILL THE AGREEMENT AFFECT REGIONAL TRADE IN CRUDE OIL AND REFINED PRODUCTS?
Glencore will likely provide liquidity for Chandra Asri’s supply of crude oil for its Bukom operations and will take refined petroleum products such as gasoline, diesel and jet fuel either for its own contracted deliveries or for sales to the cash, said a source with direct knowledge of the matter. .
“It is very common for a trading company to provide trade financing to refiners and in return they are paid per cargo. This way, a trading company can guarantee a long-term stable supply of products,” said the director of downstream consulting at S&P Global, based in Beijing. Overview of Harry Liu products.
Glencore declined to comment.
It is likely that the refinery will continue to process mainly sour crude as it is a “fairly complex refinery with a residual fluid catalytic cracker, a mild hydrocracker and a vacuum gas oil desulfurization unit”, unless the refinery The economy does not favor sweet crude, said the director of FGE. from Asia, refining Ivan Mathews.
In the longer term, however, the focus could be on fuel production rather than chemicals, for economic reasons.
“The site produces approximately 60% of transport fuels and…
