By COMFORT OGBONNA
Shell has attracted interest from several potential buyers for its U.S. chemical operations, with the assets potentially valued at as much as $8 billion as the energy giant continues to restructure its portfolio and move away from underperforming businesses.
Potential bidders include ExxonMobil and LyondellBasell, along with private equity firm Apollo Global Management and the chemicals division of Kuwait Petroleum Corporation, according to people familiar with the matter.
The interest comes as Shell seeks to reduce its exposure to chemical plants that have struggled to deliver the returns the company expects. The potential sale would represent another major step in the company’s broader effort to concentrate its investments on areas it considers more profitable, particularly oil and gas production and trading.
Shell’s U.S. chemicals operations include facilities in Louisiana, Texas and Pennsylvania. The plants manufacture a range of products used in industries including plastics, detergents and pharmaceuticals.
Potential buyers submitted nonbinding offers last month, with proposals reportedly ranging from bids for the entire U.S. chemicals business to offers for individual facilities or portions of the operation.
The potential value of as much as $8 billion would represent a significant discount to the amount Shell has invested in the facilities over the years, reflecting the difficult market conditions facing parts of the global chemicals industry.
The chemical sector has faced pressure from weaker demand, excess production capacity and competition from lower-cost producers. Those challenges have made it increasingly difficult for some major energy companies to justify continued investment in assets that once formed an important part of their downstream operations.
For Shell, the possible sale is consistent with a strategy of focusing capital on businesses that can generate stronger and more predictable returns.
The company has been reshaping its portfolio under Chief Executive Wael Sawan, who has pledged to improve financial performance and simplify the business. The strategy has included asset sales, reductions in spending on some lower-return projects and a greater emphasis on oil and gas production, liquefied natural gas and trading.
The company has also been reducing its exposure to some renewable-energy and low-carbon businesses as part of the restructuring.
Earlier this month, Shell agreed to sell its European onshore renewable power business to TotalEnergies, another indication that the company is narrowing its focus after several years of expanding into lower-carbon energy.
The potential sale of the U.S. chemical assets could attract significant interest because of the facilities’ established infrastructure, production capacity and access to major industrial markets.
ExxonMobil could view the assets as an opportunity to strengthen its existing chemicals operations, while LyondellBasell could potentially gain additional manufacturing capacity or strategic locations. Private equity investors may also see opportunities to restructure or operate the assets independently.
Kuwait Petroleum’s chemicals division could provide another strategic buyer, particularly given the company’s existing presence in the global energy and petrochemical markets.
However, the discussions remain preliminary, and there is no guarantee that a transaction will be completed. Nonbinding offers can change as potential buyers conduct financial, operational and environmental reviews of the assets.
The final value of any deal could also depend on whether Shell sells the business as a single package or separates individual plants and operations among multiple buyers.
The possible transaction highlights the changing economics of the energy and chemicals industries, where companies are increasingly evaluating whether older facilities can compete effectively in a market shaped by changing demand, new production capacity and pressure to improve returns.
For Shell, selling the chemical assets would provide an opportunity to redirect capital toward businesses it considers more competitive while reducing the financial burden associated with facilities that have struggled to meet expectations.
The company is expected to continue evaluating its options as potential buyers assess the assets and negotiations develop. No final decision on the sale has been announced.
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