Shell has signed an agreement to sell its 75% stake in Tongyi Lubricants in China to Huo’s Group and The Carlyle Group. The transaction is expected to complete by late 2015 or early 2016, subject to regulatory approvals.
Tongyi, a joint venture between Shell and Huo’s Group, is a prominent Chinese lubricant supplier with blending plants in Beijing, Xianyang of Shaanxi province and Wuxi of Jiangsu province. Shell acquired its 75% stake from Huo’s Group in 2006. The sale is consistent with Shell’s strategy to concentrate its Downstream footprint on a smaller number of assets and markets where it can be most competitive.
Shell is committed to growing its lubricants business in China through strong relationships with distributors, collaboration with key vehicle and equipment manufacturers, and the sale of premium products across all sectors. In June 2015, Shell opened a new lubricants blending plant in Tianjin with the capacity to produce 330 million litres of finished lubricants per year, enough to fill more than 65 million cars.
Other recent Downstream divestments include the sale of Downstream businesses in Australia and Italy; a number of retail sites in the UK, and the initial public offering of, and further drop downs to, Shell Midstream Partners L.P. Shell has also agreed the sale of its marketing business in Denmark and Norway and its LPG businesses in France. In July 2015, Shell announced the sale of its shareholding in Showa Shell in Japan to Idemitsu.