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CHINA'S CNOOC, TWO CHEMICAL FIRMS LOOKING AT SHELL SINGAPORE ASSETS - SOURCES

Chen Aizhu and Trixie Yap October 31, 2023

Credit: David Gn/AdobeStock


At least three Chinese companies, including state giant China National Offshore
Oil Company (CNOOC) are evaluating Shell's Singapore assets and considering
non-binding bids in the coming weeks for the city-state's oldest refinery,
according to several sources familiar with the matter.

Reuters reported in August that Shell had hired Goldman Sachs to explore a
potential sale of its refining and petrochemical plants in Singapore as part of
a broader strategic review globally to become a lower-carbon operator.

A buyer of Shell's assets on Bukom and Jurong islands would gain a foothold in
Asia's main oil trading hub but would also face competition from newer
refineries elsewhere - the Bukom facility opened in 1961 - as well as a
Singapore carbon tax set to rise sharply in 2024.

CNOOC, Eversun Holdings, and Wanhua Chemical are among those that have started
early evaluations of Shell assets that include a 237,000 barrels per day (bpd)
refinery and a one million metric ton per year (tpy) ethylene cracker, the
sources said.  

CNOOC, the parent of offshore oil and gas major CNOOC Ltd 03883.HK, operates a
joint refining-petrochemical complex with Shell in southern China.

CNOOC did not immediately respond to a request for comment.

The companies are among more than a dozen Shell invited to explore interest in
the facilities. They also included Chinese state majors Sinopec, PetroChina as
well as big independent refiners Rongsheng Petrochemical and Hengli
Petrochemical, two of the sources said.

However, Sinopec Corp's president said in late August it was not interested in
the Shell assets. Senior company officials at Hengli Petrochemical and Rongsheng
told Reuters that the companies had no plan to bid for the assets.

PetroChina and its parent China National Petroleum Corp (CNPC) did not
immediately respond to requests for comment.

"It appears that Shell has invited a broad group of companies and asked
interested parties to send in a non-binding bid and proposal as to how they plan
to run and manage the facilities," said a person involved in assessing the
assets.

Two of the sources said Shell had set a preliminary Nov. 5 deadline for
proposals, although that could be extended.

In response to questions from Reuters, Shell said the strategic review of its
energy and chemicals park assets in Singapore is ongoing and it is exploring
several options including divestment. It declined to comment on bidders or a
schedule.

Goldman Sachs declined to comment.

It could not be determined which other companies may be assessing the assets.




FEEDSTOCK BASE

CNOOC's joint venture with Shell in Huizhou, Guangdong province, produces
plastic raw materials ethylene, propylene, and derivatives. The companies agreed
in 2020 to expand the complex in the next three years. 

Privately-run Eversun Holdings, based in Fujian province, started as a nylon
producer and is building a 900,000-tpy polypropylene plant in Putian, according
to its website.

Eversun did not respond to a request for comment.

Shandong province-based Wanhua Chemical is the world's largest feedstock
supplier for polyurethane foam used in home furnishings and building insulation,
and is a leading player in chemicals used in solar panels and lithium batteries.

A Wanhua spokesperson said he was not aware of the company's potential interest
in the Shell assets.

For Chinese would-be bidders, Singapore could be a base to produce and secure
feedstocks to produce petrochemicals in China as well as a launchpad to expand
global trading and marketing, especially in fast-growing Southeast Asia, experts
said.

"The key draw for Chinese companies is to have some form of upstream feedstock
integration in Southeast Asia should they decide to expand on downstream
petrochemical derivative production and activity within the Southeast Asia
region," said Wood Mackenzie's global head of polyesters, Salmon Lee.







(Reuters - Reporting by Chen Aizhu and Trixie Yap; Editing by Tony Munroe,
Florence Tan and Kim Coghill)

Categories: Mergers & Acquisitions Refinery


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