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By Trixie Yap
SINGAPORE (Reuters) - Oil giant Shell said on Wednesday that it has agreed to sell its Bukom refinery in Singapore - one of the world's largest oil refining and trading centres - to a joint venture of Indonesian chemicals firm PT Chandra Asri and global trading house Glencore, culminating a process that began last year.
Here are the key details and what's next:
WHY IS SHELL SELLING ITS SINGAPORE "CROWN JEWEL" REFINERY?
The sale of the complex, which opened in 1961, is part of CEO Wael Sawan's plan to reduce the company's carbon footprint and to focus on its most profitable businesses.
Last year, Shell said it was conducting a strategic review of its Singapore assets.
WHO ARE THE BUYERS?
Chandra Asri is majority owner of the joint venture with Glencore, called CAPGC Pte. Ltd. (CAPGC).
Chandra Asri operates Indonesia's sole naphtha cracker which can annually produce 900,000 tons of ethylene and 490,000 tons of propylene, which are basic raw materials that are processed into other petrochemicals. It is a joint venture between several Thai and Indonesian firms including Siam Cement Group, Thai Oil and PT Barito Pacific.
Glencore is a Swiss-based producer and marketer of commodities such as copper, cobalt, zinc, nickel and ferroalloys. It markets aluminium and alumina and iron ore, and trades oil and fuel products.
WHAT IS BEING SOLD?
Shell's Bukom refinery complex includes several crude distillation units with total processing capacity of 237,000 barrels per day (bpd) and a 1 million-ton-per-year steam cracker.
Its Jurong Island facility has other derivative petrochemical units making products such as monoethylene glycol and styrene, which are key feedstocks for the polyester and plastic industries.
The deal is set to close by year-end, pending regulatory approval.
HOW WILL THE DEAL AFFECT REGIONAL TRADE IN CRUDE OIL AND REFINED PRODUCTS?
Glencore will likely provide cashflow for Chandra Asri's procurement of crude oil feedstock for its Bukom operations and take refined fuel products such as gasoline, diesel and jet fuel either for its own contract deliveries or for spot sales, a source with direct knowledge of the matter said.
"It's very typical for a trading house to provide trade finance to refiners and in return they get paid by cargoes. This way, a trading house can secure long-term stable product supply," said Beijing-based director of downstream consulting at S&P Global Commodity Insights Harry Liu.
Glencore declined to comment.
It is likely that the refinery will continue to process mostly sour crude as it is a "fairly complex refinery with a residual fluid catalytic cracker, a mild hydrocracker and a vacuum gas oil desulphurisation unit", unless the economics favour sweet crude, said FGE head of Asia refining Ivan Mathews.