The Zhitong Finance App learned that Shell (SHEL.US) said on Wednesday that it has agreed to sell its refining and petrochemical assets in Singapore, a major oil center in Asia, to a joint venture between Indonesian petrochemical company Chandra Asri Capital and Glencore Asian Holdings (Glencore Asian Holdings).

Shell said in a statement that the deal would transfer all of Shell's interests in the Shell Energy and Chemical Park in Singapore to the joint venture CAPGC.

The two companies did not disclose the value of the deal.

Shell added that, if approved by regulators, the deal is expected to close by the end of 2024.

CAPGC said in a statement that the Indonesian chemical and infrastructure company is mostly owned and operated by Chandra Asri Group, while minority shares are held by Swiss miners and commodities trader Glennon through their respective subsidiaries.

Shell's assets include a refinery capable of processing 237,000 barrels of oil per day, an ethylene plant with an annual output of 1 million tons in Bugong Island in southern Singapore, and a plant producing monoethylene glycol on Jurong Island in western Singapore.

It was reported in August last year that Shell had hired Goldman Sachs to explore the possibility of selling its refining and petrochemical plants in Singapore as part of Shell's broader global strategic assessment to become a low-carbon operator.

The sale is also part of Shell CEO Wael Sawan's plan to reduce the company's carbon footprint and focus the business on the most profitable businesses.

Buyers of Shell's assets on Wugong Island and Jurong Island will gain a foothold in one of the world's top refining and trading centers under this deal, but they will also face competition from China and other places to build new refineries (the Wugong Refinery opened in 1961), and Singapore's drastic increase in carbon taxes in 2024.

Additionally, the acquisition of Shell's plant in Singapore will provide raw materials for Chandra Asri's cracking plant and enable the company to combine its petrochemical production with refining, thereby improving efficiency and reducing costs.

According to reports, Chandra Asri operates the only naphtha cracking plant in Indonesia, which can produce 900,000 tons of ethylene and 490,000 tons of propylene every year. These basic raw materials are further processed into other petrochemical products in this complex.

For Glencore, Shell's assets will provide this global trader with a practical foothold for trading in Asia.

Glencore's only refining asset is a refinery with a daily output of 100,000 barrels in Cape Town, the third-largest refinery in South Africa. It also owns a lubricant plant in Durban.