Commodity trading giants Vitol and Glencore are set to formally bid to buy Chevron’s 50% stake in a major refinery in Singapore, Reuters reported on Wednesday, citing several sources with knowledge of the plans.
As Chevron is looking to cut costs and reshuffle priorities in the downstream business, the U.S. supermajor will be seeking final binding bids for its 50% stake in Singapore Refining Company (SRC) next month, according to Reuters’ sources.
Singapore Refining Company, which operates Singapore’s second-biggest refinery, has a crude unit capacity of 145,000 barrels per day producing liquefied petroleum gas, gasoline, jet fuel, diesel, fuel oil, and asphalt. Recent upgrades have enabled the refinery to produce higher-value gasoline that meets stricter emission standards, Chevron says.
The entire 100% in the Singapore Refining Company could be valued at about $1 billion, one source familiar with the sale process told Reuters.
Earlier this month, Brant Fish, president of International Products at Chevron said that the U.S. supermajor plans to have a balanced portfolio of refineries across Asia.
“There’ll be places like Korea where we go investment heavy in petrochemicals and in heavy oil upgrading,” Fish said at the APPEC energy conference in Singapore in early September, as carried by Reuters.
On the other hand, there will be geographies and refineries “like here in Singapore, where we’ve chosen to not make those big investments and actually get a better return through most parts of the cycle on capital employed,” the Chevron executive told the audience at APPEC.
In recent years, Chevron has been working to high-grade its global portfolio and focus on core growth assets to reduce costs and boost profits.
The trading giants, for their part, have scooped up refineries from Big Oil in recent years as the oil and gas majors reshuffle priorities and focus on growing upstream production.
By Tsvetana Paraskova for Oilprice.com
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