Shell Draws Exxon, Lyondell Interest in $8bn US Chemicals Sale
ExxonMobil, LyondellBasell, Apollo, and Kuwait Petroleum Corporation’s chemicals arm have shown interest in Shell’s US chemicals assets, which could fetch up to $8bn as the group reduces its exposure to the sector.
Shell has attracted interest from ExxonMobil, LyondellBasell and other potential buyers for its US chemicals assets, a portfolio that could command as much as $8bn as the UK energy group reduces its exposure to the sector.
Apollo and the chemicals arm of state-owned Kuwait Petroleum Corporation have also expressed interest, according to people familiar with the matter who spoke to the Financial Times.
Indicative Offers Submitted
Potential buyers submitted non-binding indicative offers last month, with proposals covering both the full US business and individual assets.
The portfolio spans four sites in Louisiana, Texas and Pennsylvania and produces chemicals used in plastics, detergents and pharmaceuticals.
The people said there is no certainty the process will lead to a transaction.
Monaca at Center of Portfolio
Among the assets is Shell’s large Monaca complex in Pennsylvania, which began operations in 2022 and can produce up to 1.6mn tonnes of polymers annually.
Shell has invested $14bn of capital in the facility.
A sale of the wider US chemicals portfolio for as much as $8bn would therefore underline the gap between potential proceeds and the capital committed to Shell’s chemicals operations.
The company is separately working with advisers to market its European chemicals assets, although those facilities are expected to be worth considerably less, according to some people.
Shell Targets Underperforming Capital
Chief executive Wael Sawan said last year that Shell had deployed $45bn of capital “that is underperforming for us” across its chemicals and renewable energy businesses.
The company said in March last year that it did not regard itself as the “natural owner” of its chemicals portfolio and planned to reduce exposure by 2030.
The chemicals unit had been loss-making until this year, when the war in the Middle East drove prices higher.
Sawan said in February that Shell would “be patient” with disposals because it did “not want to be selling at bottom-of-cycle conditions”.
Strategy Shifts Back Toward Oil and Gas
The proposed divestments form part of Shell’s effort to concentrate more heavily on its core oil and gas operations.
This year, the company agreed to acquire Canadian shale producer ARC Resources for $16.4bn, its largest acquisition in a decade.
Shell also reported its second-highest quarterly profit in the second quarter as trading benefited from market conditions created by the Middle East war, despite lower gas production.
Its chemicals retreat contrasts with moves by Chevron, Abu Dhabi National Oil Company and Saudi Aramco, which have expanded or considered expanding investments in the sector to capture more of the value chain from crude production to plastics and other chemicals.
Chemical demand is expected to continue growing even as road-fuel consumption faces longer-term pressure from the adoption of electric vehicles.