Indonesian Billionaire's CAPGC Joint Venture Acquires Shell Assets in Singapore

Indonesian Billionaire's Joint Venture to Acquire Shell's Singapore Assets

Indonesian billionaire Prajogo Pangestu's joint venture, CAPGC (Chandra Asri and Glencore), has finalized an agreement to purchase Shell's refinery and chemical assets in Singapore. The acquisition includes a refinery with a 237,000 barrels per day capacity, an ethylene cracker, and a petrochemical plant. While the financial details are undisclosed, the deal's estimated value is approximately $1 billion. Shell's decision to divest its assets in Singapore forms part of its strategy to enhance its chemicals and products business, focusing on maximizing value while minimizing emissions. Despite the sale, Shell remains committed to maintaining its presence in Singapore, with plans for ongoing partnerships as the country advances its decarbonization efforts.

Key Takeaways

• Indonesian billionaire Prajogo Pangestu's CAPGC joint venture with Glencore is set to acquire Shell's refinery and chemical assets in Singapore, including a 237,000 barrels per day capacity refinery and petrochemical plants on Pulau Bukom and Jurong Island.
• The transaction is slated for completion by the end of 2021, pending regulatory approval, with the deal's worth estimated at around $1 billion.

Analysis

The acquisition of Shell's Singapore assets by Prajogo Pangestu's joint venture is anticipated to have significant financial and strategic implications for both parties. This purchase, approximated at $1 billion, signifies an opportunity for CAPGC to expand its operations and fortify its market standing. Simultaneously, Shell’s decision to streamline its portfolio underscores its commitment to prioritizing high-grade chemicals and products, seeking to maximize value while reducing emissions. The region and industries in Indonesia and Singapore could potentially experience economic growth and increased business activities. However, Singapore's role in Shell’s regional operations may undergo changes, possibly affecting employment and local supply chains. Over time, this agreement may spur similar divestitures and acquisitions in the sector, driven by the demand for more sustainable and efficient operations. Additionally, the buyers may encounter challenges in integrating the acquired assets, while Shell might experience a reduction in operational complexity.

Did You Know?

• Barrels per day (bpd) capacity: This metric denotes the volume of oil a refinery can process daily, with a standard unit of measurement being a barrel (equal to 42 US gallons). The 237,000 bpd capacity of the refinery being acquired by CAPGC indicates its significant presence in the oil refining industry.
• Ethylene cracker: An essential equipment in the petrochemical industry, an ethylene cracker is responsible for breaking down hydrocarbons, such as ethane or propane, into smaller molecules. Its primary output, ethylene, serves as a crucial building block for various plastics and chemicals. The inclusion of an ethylene cracker in this acquisition reflects CAPGC's capacity to produce and process a diverse range of chemical products.
• Decarbonization: This process involves the reduction of carbon dioxide (CO2) and other greenhouse gases released into the atmosphere, achieved through the adoption of cleaner energy sources and more sustainable industrial practices. Shell's emphasis on decarbonization partnerships in Singapore demonstrates its dedication to lowering its environmental impact, aligning with the global shift towards sustainability and climate change mitigation in the energy and industrial sectors.