Shell plc is exploring the sale of a majority stake in its gas-to-liquids venture in Bintulu, Sarawak, according to the DealStreetAsia financial news portal.
Citing unidentified industry sources, the Singapore-based media outlet said the energy giant is exploring a potential transaction that could be valued at around US$1 billion (RM4.05 billion). Barclays was reported to be the financial adviser as it evaluates strategic options for Shell MDS (Malaysia) Sdn Bhd, the report said.
Shell’s official website showed that Shell MDS (Malaysia) is owned 72% by the group through Shell Gas BV, with the remaining shareholding held by Diamond Gas Holding Sdn Bhd (14%), PETRONAS (7%) and the Sarawak government (7%). Diamond Gas Holding is a wholly owned subsidiary of Mitsubishi Corp.
DealStreetAsia did not disclose how much of Shell’s 72% interest could ultimately be sold. It noted that discussions remain at an early stage and the terms could still change.
The business is estimated to generate annual earnings before interest, taxes, depreciation and amortisation (Ebitda) of about US$120 million to US$130 million.
A Shell spokesperson has confirmed to DealStreetAsia on the potential strategic review of its equity interest in Shell MDS, adding that no decision has been made and the business continues to focus on safe and reliable operations.
Commissioned in 1993, the Bintulu facility became the world’s first commercial-scale plant to turn natural gas into liquid hydrocarbons using Shell’s proprietary MDS technology. The process first converts natural gas into synthesis gas before converting it into hydrocarbon molecules that can subsequently be refined into different products, according to its website.
Today, the facility produces products ranging from synthetic waxes and drilling fluids to chemicals, specialty fluids and middle distillates. Its products are used in more than 40 different applications ranging from hot melt adhesives, PVC plastics, food packaging, coatings, to road construction, cosmetics, metalworking, drilling base fluids and many more.
Source: Theedgemalaysia