Shell to Seek 800 Million-Euro Offers for LPG Unit

Businessweek
23 February 2010, By Anne-Sylvaine Chassany and Fred Pals

http://www.businessweek.com/news/2010-02-23/shell-said-to-seek-800-million-euro-offers-for-european-lpg-unit.html

Royal Dutch Shell Plc, which is seeking to focus on exploration and production, may sell its liquefied petroleum gas distribution unit, four people with knowledge of the plan said.

Shell hired Credit Suisse Group AG to manage a sale of the division, which is valued at more than 800 million euros ($1.1 billion), said three of the people, who declined to be identified because the talks are private. The company sent information last week to potential bidders including private equity firms, they said. Rainer Winzenried, a spokesman for The Hague-based Shell, declined to comment.

Shell aims to save $1 billion this year and will cut 1,000 more jobs in an effort to weather the economic slowdown, which has led to high inventories of fuels like gasoline and diesel in the U.S. and Europe. Shell processed 9 percent less crude in 2009 and is in talks to sell its U.K. Stanlow refinery and two German plants to India’s Essar Oil Ltd.

“Whether this is the right time to get a good price for downstream assets remains to be seen given the low margins in the industry,” Peter Heijen, an Amsterdam-based analyst at Theodoor Gilissen Bankiers NV, said in an interview over the phone today. Heijen has a “buy” rating on Shell.
Shell fell as much as 5.5 pence to 1780 pence in London trading today.

Repsol Buys

Shell in 2004 offered its LPG distribution and marketing business up for sale and sold some LPG units, including those in Portugal, Brazil, Paraguay, Italy and parts of the Caribbean for around $350 million. Repsol YPF SA of Spain bought Shell’s Portuguese business in December 2004 and said it bid for the whole LPG unit. Shell in 2006 said it would keep parts of its LPG business that weren’t already been sold because it wasn’t offered enough for them.

About 560,000 barrels a day of capacity, or 15 percent of its total, is “under review.” It sold $1.2 billion in so- called downstream assets in 2009 and earlier this year said it would convert a 130,000 barrel-a-day Canadian plant into a storage terminal. Shell sold $11 billion in downstream assets in the past five years. Shell’s Chief Executive Officer Peter Voser said Feb. 4 it may consider selling more refining and marketing assets.

Shell in December signed a letter of intent to sell its New Zealand downstream assets to Infratil Ltd. and the Guardians of New Zealand Superannuation. Shell agreed in November to negotiate exclusively with the Infratil-led venture on the sale of the group’s 229 filling stations, port terminals and a 17 percent stake in New Zealand Refining Co. Shell may also put its Gothenburg refinery and marketing business in Sweden up for sale.