By JAMES PATON
Vitol Group agreed to pay about A$2.9 billion ($2.6 billion)
for Royal Dutch Shell's Australian refinery and filling
stations as Europe
s largest oil company
accelerates asset sales.
The acquisition includes the Geelong oil refinery south of
Melbourne and its 870-site retail business, The Hague-based
Shells Australian unit said Friday in a statement. It
doesnt include the aviation-fuel business.
Vitol, the biggest independent oil trader, will keep the
refinery operating and plans to expand the Australian
business as the economy grows, the Geneva-based company said.
Shell CEO Ben van Beurden, who took over this year, is
stepping up asset sales after weak margins from refining
and unprofitable shale
investments in North America cut earnings.
Vitol believes they can source product more efficiently
than the rest of the Australian market as highly competent
traders, said Mark Samter, a Sydney-based energy
analyst at Credit Suisse Group. Whether Vitol can make the refinery
to be seen, he said.
Shell said it has also recently agreed to sell refineries in
the UK, France, Norway, the Czech Republic and Germany, and
plans to sell more operations in Norway and Italy.
Vitol will continue to sell gasoline under the Shell brand in
Australia as part of the deal, which also includes bitumen,
chemicals and lubricant assets, according to the statement.
Shell plans to sell about $15 billion in assets through 2015
and has already announced deals in Australia, Brazil and
Italy this year. It has been examining plans to dispose of
its $6.6 billion stake in Woodside Petroleum,
Australias second-largest oil and gas producer.
The speed at which Shell can sell relatively immaterial
assets for billions of dollars highlights how unambitious its
$15 billion program is, Investec Bank wrote in a note.
We would expect the disposal target to be raised in due
The sale follows Vitols 2011 agreement to buy the bulk
of Shells downstream business in 14 African countries,
alongside Africa-focused private-equity firm Helios
Investment Partners, for about $1 billion. The Swiss company
owns refineries in the United Arab Emirates, Switzerland and
Belgium with a capacity of about 150,000 bpd, its website
Vitol is playing catch-up in Australia to Puma Energy, whose
largest shareholder is commodity trader Trafigura Beheer.
Puma made three acquisitions in the country last year
including a deal to become the nations largest
independent fuel retailer with the purchase of Ausfuel.
We accept that the global environment
Vitol CEO Ian Taylor said today in a news conference in
Melbourne. We can make this refinery
Shells investments in upstream energy, or exploration
and production, wont be affected, according to its
Australia remains important to Shell, but we are making
tough portfolio choices to improve the companys overall
competitiveness, van Beurden said.
The company plans to invest about $30 billion in natural-gas
exploration and production in Australia to meet rising Asian
demand. The company is a partner in Chevron's Gorgon
off northwest Australia
and Woodside Petroleums proposed Browse liquefied
natural gas venture. Its also developing the Prelude
floating LNG project
Shells Australian unit said in April last year it would
sell the Geelong refinery to focus on larger plants, such as
the Pulau Bukom refinery
in Singapore. The Geelong
facility processes about 120,000 bpd of oil, it said.
Refiners in Australia, including Shell and Caltex Australia,
are closing processing operations amid competition from
in Asia such as the
Reliance Industries Jamnagar plant in India
, the worlds biggest refining