Monday, Aug 16, 2004
Royal Dutch/Shell has agreed to delay the planned closure of a refinery in California, buying time to find a buyer after pressure from authorities to keep open a facility responsible for 2 per cent of the state's petrol production.
The group announced last year that it would close the 72-year-old plant at Bakersfield in October, claiming it had become uneconomic because of declining local oil production and tough environmental regulations.
However, California's attorney-general's office announced late on Friday that it had reached agreement with Shell to keep the refinery open until at least the end of the year.
"Clearly, it is possible to put together a deal (by the end of the year) that makes financial sense for Shell and a new operator and, in the process, benefits the consumers of this state," Bill Lockyer, attorney-general, said.
Shell's plan had become politically charged as California has the highest petrol prices in the continental US, reflecting in part the state's more onerous environmental rules, and what Mr Lockyer called the "high concentration" of refinery ownership.
The closure plan had prompted investigations into possible anti-trust violations by the attorney general's office and the US Federal Trade Commission.
Shell had come under further pressure to reach a settlement after a report commissioned by the attorney-general's office maintained that the refinery could be run profitably.
Shell said it might keep Bakersfield open until March 31 2005 if it secures an exemption from new emissions rules which come into force at the end of the year. Mr Lockyer said the oil group was optimistic it could make the necessary compliance changes to the refinery or secure the exemption.
Meanwhile, in Europe, Shell's decision to sell its chemicals business has increased speculation that it would also sell Intergen, the power business it set up with Bechtel in 1995.
Intergen and Basell, Shell's chemicals business, were on a list of underperforming assets and candidates for sale under Sir Philip Watts, who resigned as chairman in March.
Intergen has a disparate group of power stations, many of which are not linked to Shell's natural gas supplies, removing it from the core business. A sale is not thought to be imminent. Intergen could be worth as much as Dollars 6bn (Pounds 3.26bn).
By DOUG CAMERON and CAROLA HOYOS
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