LONDON, May 20 (Reuters) - Royal Dutch Shell willhold on to its refining business despite shedding manyunderperforming downstream assets, its chief executive said onTuesday.
The global refining sector has suffered over the past yearfrom weak profit margins due to rising capacity and increasingcompetition and Shell's downstream business has been a drag onits 2013 and first quarter 2014 results.
But Ben van Beurden said despite "unacceptable" returns theunit nonetheless benefited Shell's overall performance.
"If you look at the oil products performance, indeed thereturns are unacceptably low. To some extent it has to do withthe very poor refining environment," van Beurden told Shell'sannual general meeting in The Hague.
"Does that mean we may as well take a rather simple view andjust spin off the entire downstream because that is indeed anarea where we have quite a few of the underperforming assets? Idon't believe so."
Shell has been reviewing its downstream assets alongside itsinvolvement in U.S. shale assets as the two least performingareas in its global portfolio. It plans to divest $15 billionworth of assets in 2014/15 to improve profitability and payouts
But van Beurden insisted the company will hold on to therefining segment as part of an integrated model which he said,"although it is fundamentally different from what it was 50years ago, is very well alive and very necessary and relevant."
He added: "It doesn't mean it is a safe haven forunderperforming assets and what you have been seeing is a cleardetermination to take underperforming assets to task."
Earlier this year, Shell announced it was divesting refiningand marketing businesses in Australia, Italy, Denmark andNorway. (Reporting by Ron Bousso and Dmitry Zhdannikov; Editing bySophie Walker)
