Shell to offload Argentine downstream business to Raizen for $950m

Energy acquisition news : Royal Dutch Shell has made a $950 million deal to sell its Argentine downstream business to Brazilian biofuels producer and fuels distributor Raizen.

The transaction comprises the Buenos Aires Refinery, nearly 645 retail stations, liquefied petroleum gas, aviation fuels, marine fuels, bitumen, chemicals and lubricants businesses, and also supply and distribution activities of Shell in Argentina.

Raizen is a joint venture established by Shell and Cosan in 2011. The biofuels producer and fuels distributor manages over 6,000 Shell service stations across Brazil.

After the completion of its transaction in Argentina, the businesses purchased by Raizen through the deal will keep their relationships with Shell intact through multiple commercial agreements, worth around $300 million.

Royal Dutch Shell. Photo courtesy of Royal Dutch Shell plc.

John Abbott – Shell Downstream Director said: “We plan to continue thriving in Argentina’s downstream market through Raízen.

“Raízen has already delivered significant value for us in Brazil and we will remain an important fuel supplier to Argentina under this deal.”

Shell said that the transaction is in line with its strategy to streamline its portfolio by implementing a $30 billion divestment program. It also follows a strategic review of the group’s downstream operations in Argentina that was launched in August 2016.

Shell also said that the deal with Raizen was after holding a competitive bidding process. It expects the transaction to be wrapped up later this year and will provide the opportunity to strengthen a regional partnership with Cosan.

Shell’s upstream interests in the Vaca Muerta shale formation in Argentina will not be impacted by the agreement with Raizen. The oil and gas giant said that it sees significant long-term growth potential in the shale resources of Argentina.

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