Shell draws Exxon interest in $8bn US chemical assets sale
US supermajor and LyondellBasell among suitors as UK group looks to shed underperforming plants and refocus on oil and gas
Shell has drawn interest from potential bidders including ExxonMobil and LyondellBasell for its multibillion-dollar US chemicals assets, as the UK oil major looks to offload underperforming parts of its operations.
Shell’s US chemicals plants are located across four sites in Louisiana, Texas and Pennsylvania, producing a wide range of chemicals for use in plastics, detergents and pharmaceuticals.
The sites include the vast Monaca, Pennsylvania, complex, which started operations in 2022 and in which Shell has invested $14bn of capital, and which produces up to 1.6mn tonnes of polymers a year.
Bidders including Exxon, Lyondell, private equity group Apollo and the chemicals arm of state-owned Kuwait Petroleum Corporation have expressed interest in the assets, according to people familiar with the matter.
The interested parties submitted non-binding indicative offers for the assets last month, the people said, with the approaches including proposed acquisitions of both the whole business and parts of it. Cumulatively, the assets could fetch as much as $8bn, the people added, noting that there was no guarantee the sale process would result in a transaction.
That price would represent a steep discount to the amount of capital Shell has invested in its US chemical facilities. The energy major is also working with advisers to market its chemical assets in Europe, although those are likely to be worth far less, according to some of the people.
Wael Sawan, chief executive, said last year that Shell had deployed $45bn of capital “that is underperforming for us”, split between its chemicals business and its renewable energy arm.
The company said in March last year that it did not feel it was the “natural owner” of its chemicals portfolio and said it wanted to reduce its exposure by 2030.
Until this year, when the war in the Middle East triggered a surge in prices, the company’s chemicals unit was lossmaking despite Sawan’s efforts to trim costs. However, he said in February that Shell would “be patient” because it did “not want to be selling at bottom-of-cycle conditions”.
Shell’s exit from chemicals comes as other oil companies, including Chevron, the Abu Dhabi National Oil Company (Adnoc) and Saudi Aramco have expanded or considered expanding their investments in the sector in an effort to own more of the oil value chain, from pumping crude to eventually producing plastics and other chemicals.
While demand for road fuels is expected to decline in the future as more consumers switch to electric vehicles, that for chemicals is projected to continue to grow, with chemicals plants likely to absorb an increasing share of the world’s oil and gas.
The mooted asset sales come as Shell aims to refocus its business on its core oil and gas operations. Shell this year agreed to buy Canadian shale producer ARC Resources for $16.4bn in its largest acquisition for a decade.
The company reported its second-highest quarterly profit ever in the second quarter of this year, as the war in the Middle East continued to create opportunities for its traders despite falling gas production.
Shell, Exxon and Apollo declined to comment. Lyondell and the Kuwait Petroleum Corporation did not respond to requests for comment.