Glencore-Macquarie Said to Exit Race for Shell Australia Assets

Macquarie Group Ltd. (MQG) and Glencore Xstrata Plc (GLEN) dropped out of bidding for Royal Dutch Shell Plc (RDSA)’s Australian oil refinery and filling stations, according to four people with knowledge of the matter.

A consortium led by Vitol Group, the world’s largest independent oil trader, remains in the running, said the people, asking not to be identified as the details are private. Macquarie and Glencore, who were bidding together, would be open to restarting talks with Shell should its negotiations with the Vitol group fail, one person said.

The assets Shell is selling include storage terminals, filling stations and an oil refinery in Geelong, south of Melbourne. A deal may be reached as soon as this month, one of the people said. Deutsche Bank AG valued the assets at A$2.7 billion ($2.4 billion) in a Jan. 20 report.

Shell is stepping up asset sales after new Chief Executive Officer Ben van Beurden promised last month to cut capital spending following the company’s first profit warning in a decade. The company, which plans to dispose of about $15 billion of assets, agreed Jan. 29 to sell part of its stake in an oilfield off Brazil to Qatar Petroleum International Ltd. for about $1 billion.

A week earlier, it agreed to exit the Wheatstone liquefied natural gas project in Australia by selling its interests for $1.14 billion to Kuwait Foreign Exploration Petroleum Co.

TPG Capital dropped out of the bidding last month, a person with knowledge of the matter said then.

Spokesmen for Vitol, Macquarie and Glencore declined to comment, as did Paul Zennaro, a Melbourne-based spokesman for Shell’s Australian business.

Geelong Refinery

Shell is also seeking buyers for its interest in the Houston-to-Houma crude oil pipeline in the U.S. and for oilfields in Nigeria. It may also exit its investment in Woodside Petroleum Ltd. and some shale assets in the U.S.

The Hague-based company’s Australian unit said in April it would sell the Geelong refinery to focus on larger plants, such as the Pulau Bukom refinery in Singapore. The Geelong facility, which processes about 120,000 barrels of oil a day, may be converted to a fuel import terminal if a sale isn’t completed, according to Shell’s website.

Shell has a network of about 900 filling stations in Australia, two-thirds of which are operated by its retail partner Coles Group Ltd., owned by Wesfarmers Ltd. (WES)

Africa Purchase

Vitol agreed in 2011 to buy the bulk of Shell’s downstream business in 14 African countries, alongside Africa-focused private equity firm Helios Investment Partners LLP, for about $1 billion. The Swiss company owns and operates refineries in the United Arab Emirates, Switzerland and the Netherlands with a refining capacity of about 150,000 barrels a day, according to its website.

Vitol is playing catch-up in Australia to Puma Energy, whose largest shareholder is commodity trader Trafigura Beheer BV. Puma made three acquisitions in Australia last year including a deal to become the country’s largest independent fuel retailer with the purchase of Ausfuel.

To contact the reporters on this story: Brett Foley in Melbourne at bfoley8@bloomberg.net; Andy Hoffman in Geneva at ahoffman31@bloomberg.net; Jesse Riseborough in London at jriseborough@bloomberg.net

To contact the editor responsible for this story: Philip Lagerkranser at lagerkranser@bloomberg.net

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