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Log in Create live account IG Menu Shell share price set to fall amid Louisiana refinery sale Royal Dutch Shell's long-term plans to narrow its ownership of oil refineries continue with the possible sale of its Convent refinery in Louisiana.
Royal Dutch Shell Source: Bloomberg
Commodities Shares Royal Dutch Shell Oil refinery Petroleum Low-carbon economy IG Analyst | 2020-07-08T11:11:10+0100 A spokesman from Royal Dutch Shell has confirmed that staff and ‘local community leaders’ in Convent, Louisiana have been notified of the company’s intentions to ‘assess market interest’ for a possible divestment of its refinery located there.
Any sale would likely include a host of on-site facilities surrounding the refinery, notably its truck terminal, Shell’s rights for using the Bengal Pipeline, as well as its Sorrento salt cavern used to house liquefied petroleum gas.
The Convent refinery is a major operation for Shell, capable of generating 211,146 barrels daily. Shell has been involved with this site since 1998, when it formed a joint venture with Saudi Refining and Texaco. The site was eventually owned exclusively by Royal Dutch Shell in 2017.
However, Shell’s announcement midway through last year confirmed a shift in approach towards ownership of a smaller core of ‘uniquely positioned refineries by 2025’.
In effect, the likely sale of its Convent refinery should be seen as a positive step for the long-term sustainability of the company as it seeks to integrate its core sites more closely with Royal Dutch Shell trading hubs, producing chemicals and other products that will remain in high demand in a low-carbon world.
Shell share price flatlining as debt problems grow Despite the potential sale of its Convent refinery being part of a positive long-term strategy, Shell’s share price has yet to mirror that positivity. Since the start of the year, the Shell share price has plummeted from highs of £23.09 to as low as 970p as the Covid-19 pandemic struck.
Although it appears to have rebounded since mid-March, there are warning signs that the recovery in the last quarter is wearing off, as its share price begins to flatline and even return some of its recent gains.
Shell has recently confirmed it will take a $15 billion - $22 billion post-tax impairment charge after slashing its medium-to-long-term forecasts on the price of gas and oil. The company’s ‘gearing’ – its net debt as a percentage of net debt and equity – is expected to rise by 3% as a consequence of these charges.
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