Shell to shed downstream business in Argentina for $950 million

Robert Brelsford

Downstream Technology Editor

Royal Dutch Shell PLC has signed an agreement to sell its downstream business in Argentina—including the 100,000-b/d Buenos Aires refinery—to Raizen Group, Sao Paulo, for $950 million in cash proceeds.

Alongside the refinery and about 645 retail outlets, the sale will include Shell’s LPG, marine fuels, aviation fuels, bitumen, chemicals, and lubricants businesses, as well its supply and distribution activities in the country, Shell said.

The agreement is consistent with Shell’s strategy to simplify its portfolio through a broader $30-billion divestment program and follows a strategic review of Shell’s Argentinian downstream business that began in August 2016, the company said (OGJ, Jan. 2, 2018; Dec. 22, 2016).

Following close of the transaction later this year, the businesses acquired by Raizen will continue their existing relationships with Shell through various commercial agreements, which represent an estimated value of $300 million.

“We plan to continue thriving in Argentina’s downstream market through Raizen,” said John Abbott, Shell’s downstream director, adding that Shell will remain an important fuel supplier to Argentina under the proposed deal.

Raizen—a 50-50 joint venture formed in 2011 between Shell and Cosan, also of Sao Paulo—is a leading biofuels producer and fuels distributor in Brazil, where it currently manages more than 6,000 Shell service stations.

The sale does not include Shell’s upstream interests in the Vaca Muerta shale formation, as the Dutch company said it continues to see substantial long-term growth potential in Argentina’s shale resources.