Glencore and Chandra to Supply 20% of Shell's Refinery Production
As a strategic move, Glencore and Chandra Asri have established a new business unit to manage the Shell Singapore refinery they acquired. The joint venture, named CAPGC, plans to allocate approximately 20% of the refinery's production to the facility's former owner, Shell. This decision comes as part of the acquisition agreement, expected to be completed in the first quarter of 2025, following regulatory approval.
The new company, named Aster Chemicals and Energy, will oversee the operation of the refinery, along with crude oil purchases and fuel sales. The company has signed a long-term crude oil supply agreement with Abu Dhabi National Oil Co (ADNOC) and is currently in negotiations for additional supply contracts. The majority stake in the joint venture belongs to Chandra Asri, an Indonesia-based petrochemical firm.
The sale of Shell’s refinery, announced in May, marks a significant change in the Singapore refinery sector and includes the sale of the refinery with a daily capacity of 237,000 barrels, along with a steam cracker and petrochemical facilities on Bukom and Jurong Islands. The facility has been operational since 1961.
This acquisition will provide Glencore with greater access to refined products and a new outlet for crude oil, strengthening the company's trading operations in Asia. Meanwhile, Chandra Asri will have the opportunity to expand its market share in the petrochemical sector. Trial operations for various processes under the new business structure are planned to begin in December.
Shell's trading arm has transferred four traders to Aster Chemicals and Energy's commercial sales department. Additionally, all employees dedicated to Shell Energy and Chemicals Park Singapore will continue to work at CAPGC after the transaction is completed.
Glencore is expected to supply crude oil to the refinery starting in February, with preparations for cargo arrivals already underway for that month. However, Glencore did not comment on its supply plans, and neither Chandra Asri nor ADNOC responded to requests for comments.
Under Shell’s current operations, the refinery primarily imports crude oil from Qatar, Saudi Arabia, the UAE, and Iraq, with additional low-sulfur supplies sourced from Brazil, the U.S., Brunei, and Malaysia.
As part of the ongoing relationship with the refinery, Shell International Eastern Trading (SIETCO) will maintain a two-year agreement with Aster to purchase 20% of refined fuel production, such as gasoline, diesel, and jet fuel. This arrangement will meet the fuel requirements of Shell's gas stations in Singapore.
Purchases of refined fuel products from the refinery by Glencore will be managed through separate sales agreements with Aster. In terms of petrochemicals, Chandra Asri is considering consolidating naphtha purchases across its facilities in Indonesia, Thailand, and Singapore and centralizing some of its petrochemical sales.