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Shell May Close or Sell Montreal East Oil Refinery

Bloomberg.com

By Guy Collins and Rachel Graham

July 9 (Bloomberg) — Royal Dutch Shell Plc may close or sell its Montreal East refinery in Quebec, Canada, as Europe’s biggest oil company carries out a global review of assets.

Other options include converting the 130,000 barrel-a-day refinery into a terminal, establishing a joint venture or leaving the plant running, a Shell spokesman said today by telephone, declining to be identified in line with company policy. Thereview could take some months and no decisions have yet been taken, he said.

Refiners need to consolidate and close plants to increase profitability, the Organization of Petroleum Exporting Countries said yesterday. The Hague-based Shell put two refineries in northern Germany up for sale earlier this year. Chief Executive Officer Peter Voser has pledged to simplify decision-making and cut costs against a deteriorating economic backdrop.

Shell is keen to improve performance at its downstream operations, said Richard Griffith, an analyst at Evolution Securities Ltd., by phone from London. “That entails culling weaker components of the portfolio.”

Global refining margins dropped to an average of $4.98 a barrel in the second quarter from $8.25 a year earlier, according to BP Plc data.

Shell is continuing to review its global assets as Voser attempts to put his stamp on the company after succeeding Jeroen van der Veer. Voser said in May that Shell has become “too complex,” announcing plans to merge the exploration and production, gas and power, and oil-sands units along geographical lines.

To contact the reporters on this story: Guy Collins in London at[email protected]Rachel Graham in London[email protected]

Last Updated: July 9, 2009 07:30 EDT

Bloomberg.com Article

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