Shell is engaged in "deep discussions" to sell parts of its chemicals business, chief executive Wael Sawan said today in the company's third quarter earnings call.
The company's options include outright asset sales, portfolio combinations and other capital-markets transactions aimed at unlocking value from its chemicals portfolio. The company declined to identify any prospective buyers or partners involved in the ongoing talks.
Argus reported in August that Shell was considering a sale of its US chemical portfolio, which includes four major plants in Texas, Louisiana and Pennsylvania. An analyst also sought an update on UK-based chemicals group Infineum, a 50-50 joint venture between Shell and ExxonMobil.
"We do not think we are the natural owners of these chemical assets," Sawan said.
The extent of any sale remains uncertain, as Shell's chemicals portfolio includes major manufacturing assets across North America, Europe and China.
Shell is under no pressure to complete a transaction, Sawan said, citing the company's strong cash position and improving chemicals performance. Shell would only pursue a deal if it can secure appropriate value for the asset portfolio.
Shell said it has flexibility in how it monetizes its chemical assets and could pursue portfolio combinations or take a minority equity stake in a larger entity if buyers are unwilling to pay valuations that reflect the assets' longer-term earnings potential.
"If we don't get the right deal, we don't transact," Sawan said.
Shell's chemicals business generated positive free cash flow for a second consecutive quarter in the third quarter. Shell Polymers Monaca, the company's $14bn Pennsylvania chemical complex, "has been performing very, very well," Sawan said.
"I think [Monaca] is a core part of this, and that's why we are taking time to be able to demonstrate the quality of that asset," he said.
Shell has US ethylene production capacity of 3.9mn metric tonnes (t)/yr across its US portfolio, according to a US Securities and Exchange Commission filing. The company also produces polyethylene, styrene monomer, ethylene glycol and other products at its US plants.
