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May 30, 2021 [Chemichal Engineering] – Shell Oil Company, a subsidiary of Royal Dutch Shell plc (The Hague, the Netherlands), has reached an agreement for the sale of its interest in Deer Park Refining Limited Partnership, a 50-50 joint venture between Shell Oil Company and P.M.I. Norteamerica, S.A. De C.V. (a subsidiary of Petroleos Mexicanos, or Pemex).
The transaction will transfer Shell’s interest in the partnership, and therefore full ownership of the refinery, to Pemex, subject to regulatory approvals.
“Shell did not plan to market its interest in the Deer Park refinery; however, following an unsolicited offer from Pemex, we have reached an agreement to transfer our interest in the partnership to them,” said Huibert Vigeveno, Shell’s Downstream Director. “Pemex has been our strong and active partner at the Deer Park Refinery for nearly 30 years, and we will continue to work with them in an integrated way, including through our on-site chemicals facility, which Shell will retain. Above all, we remain committed to the wellbeing of our employees and will work closely with Pemex to ensure the continued prioritization of safe operations. We’re proud of our 90-plus year history as an operator and neighbor at Deer Park and we will continue to play an active role in the community”.
The consideration for this transaction is $596 million which is a combination of cash and debt, plus the value of hydrocarbon inventory. This transaction allows Shell to further focus its refining footprint while also maintaining integration optionality and retaining value through its Chemicals and Trading activities.
The transaction is expected to close in Q4 2021. The transaction covers the sale of Shell Oil Company’s 50.005% interest in Deer Park Refining Limited Partnership. Shell Chemical L.P. will continue to operate its 100% owned Deer Park Chemicals facility located adjacent to the site.
The Deer Park Refinery has a crude oil capacity of 340,000 barrels per day. The refinery processes crudes from Mexico, Canada, the U.S., Africa and South America. Products produced by the refinery include gasoline, aviation fuels, diesel fuels, ship fuel and petroleum coke.
The hydrocarbon inventory will be valued at closing based on actual volumes and prevailing market prices. The current value of the hydrocarbon inventory would range from $250 to $350 million in cash assuming current market prices and historic inventory volumes under normal operating conditions.
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