The Wall Street Journal: Calif Senator Challenges Shell’s Efforts To Sell Refinery
“Federal Trade Commission confirmed that it has opened a formal antitrust investigation into Shell’s decision to close the refinery”
By BETH HEINSOHN
July 8, 2004 6:03 p.m.
Of DOW JONES NEWSWIRES
NEW YORK — U.S. Senator Dianne Feinstein, D-Calif., has taken a new tack in challenging Royal Dutch/Shell Group (RD,SC) unit Shell Oil’s plan to shut its refinery in Bakersfield, Calif., by questioning whether the company is making sufficient efforts to sell the facility.
Shell ‘s plan to close the 70,000 barrel a day refinery by Oct. 1 is raising fears along the West Coast of a further squeeze on an already tight motor fuels market, where consumers for years have paid the highest prices in the continental U.S.
In a letter to Lynn Laverty Elsenhans, president and chief executive of Shell Oil Products U.S., Feinstein questioned the executive’s assertion in a telephone call that Shell would prefer to sell the refinery rather than close it.
Feinstein asserted Shell hasn’t created a “data room” accessible to potential buyers, never offered the assets for sale, hasn’t prepared a prospectus or offering document, and hasn’t engaged an investment banker to negotiate a sale.
“I understand that there are several willing buyers out there for the Bakersfield refinery,” Feinstein wrote in the July 7 letter. “Yet, I have heard that Shell has not made a good faith effort to sell the refinery.”
Company spokesman Stan Mays declined to comment on the letter’s specific allegations, but defended Shell ‘s efforts as an “active sales process.”
“There are many different ways you can sell a refinery,” Mays said. “We recently sold the Delaware City refinery without any broker. We have in-house talent for that.”
That refinery, previously owned by Motiva, a joint venture between Shell and Saudi Aramco (SOI.YY), was sold to Premcor Inc. (PCO) in May.
Shell has received a total of 28 inquiries regarding the possible purchase of the Bakersfield refinery, Mays said. Six have progressed to the point where confidentiality agreements have been signed, but to date there has been no agreement to sell the facility.
The Bakersfield refinery represents 2% of California’s total current gasoline production and 6% of its diesel production, California Energy Commission spokeswoman Suzanne Garfield said.
Wednesday, the U.S. Federal Trade Commission confirmed that it has opened a formal antitrust investigation into Shell’s decision to close the refinery.
-By Beth Heinsohn, Dow Jones Newswires; 201-938-4435; email@example.com