Royal Dutch Shell PLC is looking to sell its stake in its Chinese lubricants joint venture Tongyi in a deal that could bring up to $500 million, Dow Jones Newswires reported last Thursday citing people familiar with the situation. When Shell Chief Executive Ben van Beurden took the helm in January he laid out plans to sell $15 billion of assets by the end of 2015.
Shell holds a 75% stake in the lubricant joint venture, while the remaining 25% stake is held by Huo Zhenxiang, the founder of the JV. Bids are expected to come in between $350 million and $500 million, according to people familiar with the situation.
The Dow Jones Newswire article goes on to state that Blackstone Group LP appears to be in a strong position for first round bids among the private-equity firms looking at the Chinese operation. The U.S. private-equity firm is reportedly working with Tongyi's founder, Huo Zhenxiang. It is expected that foreign buyers will also participate in large numbers to avail the opportunity to buy a majority stake in the joint venture.
If a sale is completed, Shell will continue to have substantial operations in China. Among those are a network of around 1,000 retail fuel stations, natural-gas exploration projects in western China's Sichuan province, and an investment in the Nanhai petrochemicals complex that is a joint venture between Shell and China National Offshore Oil Corp., known as CNOOC.
In September 2006, Shell bought the 75% stake in Tongyi. However the firms strategy back then was of expansion, in contrast to its strategy now.
OEM/Lube News contacted Shell's global communications office in London to confirm the above and obtain more details, but the Shell spokesperson told OEM/Lube News "There is no comment from Shell on this story".
