Shell sells its stake in Germany's Schwedt refinery as part of downstream shake-up

Shell has agreed to sell its minority stake in Germany's 220,000 b/d PCK Schwedt refinery to a subsidiary of Estonia's privately owned Liwathon Group, the energy major said July 8.

The divestment forms part of Shell's strategy to reduce its global refining footprint to a number of core, integrated sites and cut its carbon footprint.

Shell holds a non-operated 37.5% stale in the independently managed plant alongside Rosneft (54.17%) and Eni (8.33%), which each have pre-emption rights over Shell's stake. Shell's stake will be acquired by Liwathon's Austria-based Alcmene unit, which will provide energy and commodities trading from its headquarters in Vienna, Shell said.

Without providing financial details of the sale, Shell estimated that the current value of its hydrocarbon inventory at the refinery would range between $150 million and $250 million.

Located 120 km northeast of Berlin, the PCK Schwedt refinery is supplied with Russian Urals crude through the Druzhba oil pipeline. Shell owns Germany's Rheinland refinery, the country's largest, which processes more than 15 million mt/year of crude oil.

"This is yet another milestone in our journey towards a reduced refining portfolio," Shell's EVP for Manufacturing Robin Mooldijk said in a statement. "This sale supports the shift of Shell's refining portfolio which includes the development of the high-value Energy & Chemicals Park Rheinland."

Shell launched Europe's largest green hydrogen electrolyzer at the Rheinland refinery last week and is planning a commercial bio-PTL (power-to-liquid) plant at the site which would produce 100,000 mt/year of synthetic kerosene and raw gasoline (naphtha) using green hydrogen.

Refining sales

Shell aims to become a net-zero emissions energy business by 2050, a target which will see the company reduce the production of traditional fuels by 55% by 2030.

Shell last year announced plans to transform its then footprint of 14 refining sites into six energy and chemicals parks, namely at Deer Park (US), Norco (US), Pernis (Netherlands), Pulau Bukom (Singapore), Rheinland (Germany) and Scotford (Canada).

The company has agreed the sale of four US refineries over the last year alone. Shell has stated goals to reduce carbon intensity by 20% by 2030 and 45% in 2035 from its 2016 baseline by shedding global refinery capacity and focusing on facilities with associated chemical plants.

Shell had been looking to sell its stake in the Schwedt refinery for some time and in 2016 said it was in advanced talks with Varo Energy, a partnership between Reggeborgh, the Carlyle Group and international energy and commodities company Vitol, for the sale of its stake.

The current transaction is expected to close in the second half of 2021, subject to partner rights and regulatory approval.