Shell Explores Sale of Chemicals Assets in U.S. and Europe
Energy company is trying to focus on its most profitable operations
Shell SHEL -0.60%decrease; red down pointing triangle is exploring a potential sale of its chemicals assets in Europe and the U.S., according to people familiar with the matter, part of a continuing drive to refocus the company’s business on its most profitable operations.
The details
The oil and natural-gas company is working with bankers at Morgan Stanley on a strategic review of its chemicals operations, the people said. The process is in the early stages and Shell has yet to commit to any final decisions, they added.
Among the assets included in the review is Shell’s Deer Park facility in Texas. The site produces a range of chemicals such as light and heavy olefins, which can be used to make pharmaceuticals, detergents, adhesives and wire coating. The operation is located adjacent to a refinery, which Shell previously sold its stake in.
Shell also has chemical facilities in Pennsylvania and Louisiana in the U.S. In Europe, it has plants in the U.K., Germany and the Netherlands.
Potential bidders for the assets could range from private-equity firms to Middle Eastern buyers wanting to expand into the West.
The context
Since Chief Executive Wael Sawan took the helm of Shell at the start of 2023, the company has worked to focus more on its most profitable operations. To that end, the company has rolled back some of its green-energy targets and pledged to pump more oil and gas.
Shell’s chemicals business has been seen as lagging behind for years. It is capital-heavy and subject to cyclical ups and downs, resulting in losses in recent years that have weighed on the company’s overall performance. Anemic natural-gas prices and rising capacity in chemical manufacturing have caused the petrochemical market to languish recently.
The company has already signaled its willingness to shed lower-margin chemicals operations. Last year, it struck a deal to sell its chemicals park in Singapore to a joint venture that includes Glencore, the mining company, and Chandra Asri, an Indonesia-based chemicals producer, after a strategic review of the business.
Investors are expecting further details on Shell’s next steps at an investor day scheduled for later this month.