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The Wall Street Journal: Shell Steps Up Asset Sales With $2 Billion in Deals

French Refineries Go
To Basell, Petroplus,
Project Stake to E.On

By BENOÎT FAUCON, KATHARINA BART and ELIZABETH COWLEY
August 2, 2007 2:32 p.m.

LONDON — Royal Dutch Shell PLC said it agreed to sell three French refineries and its stake in a Norwegian oil-and-gas project, accelerating divestments that have boosted its profitability this year, even as rivals are suffering.

The sales announced Thursday, with a combined value of about $2 billion, follow Shell’s divestment of billions of dollars in noncore, less-profitable assets since a new management team took over in 2004. The Anglo-Dutch oil major said it was selling two French refineries to Swiss refiner Petroplus Holdings AG for $475 million, plus working capital: the 154,000-barrels-a-day Petit Couronne and the 85,000-barrels-a-day Reichstett-Vandheim plants.

Shell also agreed to sell its Berre-l’Etang refinery complex in France to Dutch petrochemical company Basell International Holdings BV for $700 million.

Shell put the refineries up for sale in January as part of its “more profitable downstream” policy that seeks to improve the performance of its refining portfolio by selling smaller, lower-margin assets.

The Shell refinery deals are just the latest transactions in a shopping spree by both acquirers. Last month, Basell agreed to buy U.S. chemical peer Lyondell Chemical Co. for $12.7 billion. Basell was itself acquired from Shell and BASF AG in 2005 by billionaire Len Blavatnik, through his holding Access Industries. For Petroplus, the move is in keeping with its strategy to aggressively grow through deals, spearheaded by Chief Executive Thomas O’Malley, a leading figure in the U.S. refinery consolidation of the 1980s and ’90s. It will bring Petroplus’s total throughput to a capacity of 864,000 barrels a day.

The Shell refinery sales, subject to staff consultation and regulatory approval, are expected to be concluded in 2008.

Separately, Shell said it agreed to sell its 28% interest in Norway’s Skarv and Idun oil-and-gas development to German utility company E.On AG for $893 million.

Shell’s divestment of Norwegian North Sea assets is expected to be completed by the end of the year. The project’s operator, BP PLC, submitted a $5 billion development proposal for the Skarv and Idun fields to the Norwegian government in June.

For E.On, the acquisition stems from its evaluation of opportunities to buy up stakes in North Sea projects sold by exiting oil-and-gas majors.

Before selling its stake in the Norwegian project, Shell also decided in June to put up for sale assets in the U.K. North Sea.

For the past three years, under the management of Chief Executive Jeroen van der Veer, Shell has sold billions of dollars of minority stakes and noncore assets to raise cash for large exploration and production projects. Those sales included its 50% stake in Basell for €2.2 billion ($3 billion) and its 68% in power company InterGen NV for more than $1 billion.

Write to Benoît Faucon at [email protected], Katharina Bart at [email protected] and Elizabeth Cowley at [email protected]

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