Shell to sell Singapore petchem assets in ongoing effort to decarbonise the region

OIL AND GAS company Shell is set to sell off all its petrochemical and refinery assets in Singapore as it moves to decarbonise its operations in the Asia-Pacific region.

Shell’s decision to sell its Energy and Chemicals Park to CAPGC, a joint venture comprising companies Chandra Asri and Glencore, follows a strategic review last year of its Singaporean assets, including the country’s first oil refinery.

The sale is part of Shell’s plan to high-grade its chemicals and products portfolio, increasing profits for shareholders by around 15%, and helping it reach its net zero 2050 target by investing in low-carbon energy solutions.

A Shell spokesperson said: “The decision of divestment is in response to the ongoing high grading journey of Shell Group’s chemicals and products portfolio over the years, the current challenging market conditions, and enhanced capital discipline.”

The new owners

The Shell Energy and Chemicals Park Singapore comprises its integrated refining and chemicals assets on Pulau Bukom and Jurong Island. The Bukom location includes a 237,000 bbl/d refinery and a 1.1m t/y ethylene cracker.

Jurong Island is home to Shell’s largest petrochemical production and export centre in the Asia-Pacific region, producing ethylene oxide and propylene oxide.

CAPGC is majority-owned by Chandra Asri, which produces a range of olefin-based products and operates Indonesia’s only naphtha cracker, and Swiss mining giant Glencore.

Shell has said all current staff working at its facilities will retain their employment under CAPGC.

Shell’s commitment to Singapore

Though it is on a path to low-carbon operation, Shell said it still retains more than 57 retail fuel stations in Singapore and has stakes in the Petrochemical Corp of Singapore (PCS) and the Polyolefin Company (TPC) Singapore, as reported by Reuters.

A Shell spokesperson said: “Shell has significant businesses spanning trading and marketing of liquefied natural gas; trading, marketing, and shipping of oil products, lubricants, and chemicals; low carbon solutions; and operating a network of service stations through retailers, as well as electric vehicles charging.

“We have a lubricants blending and grease manufacturing plant at Tuas, and Shell also continues to operate a distribution terminal at Pandan.”

Singapore’s big decarbonisation challenge

Though Singapore accounts for less than 1% of global CO2 emissions, its efforts in decarbonisation have been deemed “critically insufficient” by Climate Action Tracker, which said the country’s policies and actions were not consistent with limiting warming to 1.5^oC.

In 2022, the country made a pledge in line with the Paris Agreement to reach net zero by 2050 through investing in low-carbon technologies and raising its carbon tax across all industry sectors.

Last month, Shell formed a consortium, S-Hub, with rival ExxonMobil, which owns the largest oil refinery in Singapore, to develop a cross-border carbon capture and storage (CCS) project for the government of Singapore. S-Hub expects its CCS project to capture and store at least 2.5m t/y of CO2 by 2030.

Shell said the sale to CAPGC is subject to regulatory approval but expects the handover to be complete by the end of the year.