SINGAPORE – Swiss miner and commodities trader Glencore is looking at buying Shell’s oil refinery and petrochemical units in Singapore as the oil major seeks a purchaser after earlier suitors dropped out, several industry and trading sources said.

Glencore is working jointly with Indonesia’s Chandra Asri Petrochemical to evaluate the assets, two sources said.

The assets include a refinery capable of processing 237,000 barrels per day (bpd) of oil and a one-million-metric-tonne-per-year ethylene plant on Pulau Bukom, as well as a plant that produces mono-ethylene glycol on Jurong Island.

Buying the Bukom and Jurong assets would give Glencore a physical foothold for its trading in Asia’s main oil hub. However, the ageing operations have struggled to make money, particularly for petrochemicals, and face competition from newer refineries in China and elsewhere.

Investment bank Morgan Stanley is working with Glencore on a potential deal, according to two sources familiar with the matter.

Reuters reported in December that Shell shortlisted at least four companies including state-run China National Offshore Oil Corp (CNOOC), top global energy trader Vitol and private Chinese chemical firms Eversun Holdings and Befar Group to submit formal bids by end-February.

CNOOC and Befar have opted out, several sources said.

Glencore has shown interest in the assets since early in the process, according to six sources, including trading executives close to the firm. Its only refining asset is a 100,000 bpd facility in Cape Town that is South Africa’s third-largest refinery. It also owns a lubricant plant in Durban.

High operating costs at the Shell facility as well as the spectre of a carbon tax the city-state is set to implement are deterrents to would-be buyers, sources have said.

The Bukom plant was Singapore’s first refinery when it opened in 1961 and was once the company’s biggest refining petrochemical complex globally.

CNOOC, which has a long-time partnership with Shell in China, halted its potential bid around late December, stopping short of hiring financial advisers after discussions with several global investment banks, according to two people with knowledge of the matter.

CNOOC, which has the smallest refining portfolio among China’s three oil majors, has no experience acquiring downstream assets outside China. REUTERS