London/New Delhi: Europe’s largest oil company, Royal Dutch Shell Plc, is in exclusive talks with Essar Oil Ltd over the sale of three refineries in the UK and Germany.
Negotiations continue with Essar only, Cornelia Wolber, a spokeswoman for Shell, said on Friday by telephone from Hamburg. Talks with other interested parties have ended, she said, without identifying them.
Exclusive negotiations: Essar’s oil refinery complex at Vadinar, India.
Shell is reviewing the future of its refineries worldwide as it seeks to reduce costs and cut spending after the global recession curbed demand for fuels and dragged down prices. Declining profit margins have prompted refiners to idle plants, seek the sale of others and slow operating rates.
Essar is in exclusive talks with Shell on the three plants, Manish Kedia, a spokesman for Essar Oil, said in an email.
Shell, based in The Hague, said this week it doesn’t expect profit from processing crude to rise in the near term. The company may sell its Hamburg-Harburg and Heide refineries in Germany, among the country’s smallest, and the UK’s Stanlow plant.
The Hamburg site can process 110,000 barrels a day, while Heide has a capacity of 91,000 barrels a day, according to data compiled by Bloomberg. Stanlow, Britain’s second largest refinery, can process 233,000 barrels a day.