SYDNEY - Global energy major Royal Dutch Shell has agreed to sell its Australian downstream businesses including its loss making refinery, hundreds of service stations, bulk fuel and chemicals unit for $2.6 billion to oil trading firm Vitol.
"The sale covers Shell's Geelong Refinery and 870-site retail business - along with its bulk fuels, bitumen, chemicals and part of its lubricants businesses in Australia. It also includes a brand license arrangement and an exclusive distributor arrangement in Australia for Shell Lubricants," the Anglo-Dutch multinational company said in a statement Friday.
The deal however does not include the aviation business, which will remain with Shell Group, or the lube oil blending and grease plants in Brisbane, which will be converted to bulk storage and distribution facilities, the company stated.
The majority of Shell's downstream staff in Australia will continue to operate the business under its new owner.
Sovereign wealth fund Abu Dhabi Investment Council backed Vitol bagged the deal in an auction of assets by Shell, outbidding consortium of Macquarie Group Ltd. and Glencore Xstrata plc .
Shell's disposal of assets is in line with its sale of refineries and other downstream businesses in several countries including Britain, Germany, France, Norway, the Czech Republic, Egypt, Spain, Greece, Finland and Sweden.
The latest deal takes Shell's disposals to more than $4.7 billion since Chief Executive Officer Ben van Beurden took control of the company in January with a commitment to slash capital costs by offloading $15 billion of assets by the end of 2015.
"Australia remains important to Shell, but we are making tough portfolio choices to improve the company's overall competitiveness," said Beurden.
"Our customers will continue to benefit from the quality associated with the Shell brand and we are confident Vitol will invest in and grow the business."
The deal, which will have to be approved by the Australia'sForeign Investments Review Board, is expected to close within this year
Vitol is meanwhile planning to retain Shell brand post the acquisition, while also retaining the staff at the refinery, service stations and other businesses being acquired by it.
"It is our full intention that all the jobs in Geelong will stay," Vitol chief Ian Taylor said. "We are buying the business to build the business."