Royal Dutch Shell will shut down its Convent refinery in Louisiana after failing to find a buyer for the facility, stated by the company.
The move, due to be completed before the end of the month, is in line with Shell’s plans to reduce the number of refineries it operates from 14 to 6 over the next four years. The plans, in turn, are part of its strategy to shift away from its core business and into alternative energy.
The supermajor will “invest in a core set of uniquely integrated manufacturing sites that are also strategically positioned for the transition to a low-carbon future,” Shell said in the statement. “A key advantage of these core sites will also come from further integration with Shell trading hubs, and from producing more chemicals and other products that are resilient in a low-carbon future.”
Last year, Shell sold its Martinez refinery to PBF Holding Company for $1 billion, but last year oil was trading a lot higher than it is trading now, and demand for oil and oil products was not devastated by a coronavirus pandemic that has infected more than 47 million people so far.
The Convent refinery has a capacity of 211,100 barrels of oil daily, and it appears that no other company with downstream operations is interested in additional refining capacity. Bloomberg points out, refiners are closing facilities in response to the demand slump. Phillips 66 and Marathon Petroleum both have refinery closure plans as well as plans to convert other refining facilities to biodiesel production sites.
Shell, for its part, wants to keep the refineries that also have petrochemical units, including one in Louisiana, one in Texas, one each in Germany and the Netherlands, one in Singapore, and one in Canada.