Shell and Essar's Negotiations Near Deadline

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Researched by Industrial Info Resources (Sugar Land, Texas)--Essar Oil Limited (BOM:500134) (Mumbai, India) and Royal Dutch Shell plc (NYSE:RDS.A) (The Hague, Netherlands) have been in exclusive talks since October 30 regarding the sale of the 233,000-barrel-per-day (BBL/d) Stanlow refinery in the United Kingdom, as well as two refineries in Germany: the 110,000-BBL/d refinery in Hamburg and the 92,000-BBL/d Heide refinery.

Discussions involve Shell's acquiring a 10% stake in the Indian company after selling the refineries. The 10% stake is valued at about $360 million (242 million euros), which accounts for less than half of the $800 million (535 million euro) value of the three plants, the Economic Times (New Delhi) reported November 21, citing unidentified sources.

Decreasing profit margins have forced refiners to shut down, slow production or sell plants. Shell, like several other companies, is reviewing the future of its refineries as is trying to reduce costs after the global recession. The deadline for the completion of negotiations with Essar is only days away.

Essar is engaged in the exploration and production of oil and gas, crude-oil refining, and the marketing of petroleum products. The company is a diversified business corporation present in more than 15 countries worldwide with a balanced portfolio of assets in the manufacturing and services sectors of Steel, Energy, Power, Communications, Shipping Ports & Logistics and Projects.

Shell is engaged globally in the principal activities of the oil and natural gas industry. The Company operates in five business segments: Exploration & Production, Gas & Power, Oil Sands, Oil Products, and Chemicals.

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