Shell to Sell Geelong Refinery in Victoria, Australia

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Researched by Industrial Info Resources Australia (Perth, Australia)--Shell Company of Australia Limited (Melbourne, Australia), a subsidiary of Royal Dutch Shell plc (NYSE:RDS.A) (The Hague, Netherlands), recently announced that its Geelong refinery in the state of Victoria is on the market, and the company hopes a sale can be finalized by the end of 2014. Shell decided to shut down the refinery in response to competition from other mega-refineries. The sale reflects Shell's change in global strategy to concentrate on investments at larger sites.

The sale will mean Shell can concentrate on downstream investments and the growth opportunities in its retail and bulk fuel business, as well as the terminals and pipelines that support them.

If Shell is unable to sell the refinery, it will consider converting the Geelong site to an import terminal, similar to Shell's Clyde refinery refurbishment and Caltex's Kurnell refinery refurbishment.

Shell's proposed sale or closure of its Geelong refinery has resulted in a $203 million write-down, contributing to a third-straight annual loss from the company's Australian refining and fuel-making assets.

The latest write-down, which follows April's decision to sell the plant, comes after a $638 million write-down last year and a $407 million write-down of the recently closed Clyde refinery in Sydney the year before.

The 120,000-barrel-per-day Geelong refinery currently supplies 50% of Victoria's fuel and 30% of South Australia's fuel. If the refinery is closed, Australia will become more dependent on imported fuel and more vulnerable to international markets.

Shell Australia is continuing with development of multiple upstream natural gas projects in Australia and Asia, including Shell's Prelude floating LNG (FLNG) project. Shell is focused on conventional gas resources and is investing in coal seam gas in Queensland via its purchase of Arrow Energy (Brisbane, Australia).

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