US oil major Chevron has sought non-binding bids for the sale of its 50% stake in Singapore Refining Company (SRC).
This also includes bids from its joint venture partner PetroChina, Reuters reported on Thursday.
Chevron is exploring the sale of additional assets in Asia, including its terminal and fuel storage facilities in Australia and the Philippines, according to the Reuters report.
Chevron’s global restructuring
The impending sale of these assets aligns with Chevron’s overarching global restructuring initiative, a strategic maneuver aimed at optimising operational efficiency and achieving substantial cost reductions.
This comprehensive overhaul is projected to result in a significant workforce reduction, potentially impacting up to 20% of its global employees by the close of next year.
The restructuring reflects a broader industry trend among major energy companies to adapt to fluctuating market conditions, technological advancements, and increasing pressures for financial prudence.
By divesting non-core assets and streamlining its organisational structure, Chevron aims to strengthen its financial position, enhance its competitive edge, and better allocate resources to high-growth areas.
This strategic pivot is critical for ensuring long-term sustainability and profitability in a dynamic global energy landscape.
Sale process and key players
Meanwhile, Morgan Stanley has been appointed by Chevron to explore the sale of the SRC refinery in Singapore, along with other Asian assets, according to the report.
The report also revealed that PetroChina, through its Singapore Petroleum Co Ltd unit, which holds the remaining 50% of SRC, has the primary right of refusal to acquire Chevron’s stake.
Global trading firm, Glencore is among the other firms invited to review the refinery stake.
Sources estimate Chevron’s stake in the Singapore refining business to be worth hundreds of millions of dollars. Industry experts, who are not involved in the process, have provided valuations for 50% of the plant, ranging from $300 million to $500 million.
SRC refinery
The SRC refinery stands as a pivotal, albeit the most compact, refining facility within Singapore’s bustling energy landscape.
With a substantial crude processing capacity of approximately 290,000 barrels per day, it plays a significant role in meeting regional fuel demands, despite its smaller scale compared to other refineries in the nation.
A key operational strength of the SRC refinery lies in its impressive maritime infrastructure.
It boasts a total of seven strategically located shipping berths, each meticulously designed and equipped to accommodate very-large crude carriers (VLCCs).
This critical capability, as detailed on SRC’s official website, ensures the efficient and high-volume import of crude oil and the subsequent export of refined petroleum products.
The ability to handle VLCCs underscores the refinery’s commitment to large-scale operations and its seamless integration into global supply chains, facilitating the smooth flow of energy resources.
Chevron divested its interest in Chevron Phillips Singapore Chemicals last month. The stake was acquired by Aster Chemicals and Energy, a joint venture formed by Chandra Asri and Glencore.
This refinery deal would be the second time a global major has exited Singapore’s refining sector recently. This is due to a carbon tax that has increased operating costs, making the sector less competitive compared to operators in other regions.
Shell concluded the sale of its Bukom and Jurong Islands facility in Singapore in April. This operation, which began in 1961, was sold to a joint venture between Chandra Asri and Glencore, marking Shell’s exit from the venture.
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