Essar Energy and Shell sign exclusivity agreement

Global oil and gas company Shell has received an offer from Essar Energy to buy its 272,000 barrel-per-day Stanlow refinery and associated local marketing businesses in the UK for a total expected consideration of some $1.3bn (£0.8bn).

In light of Essar’s offer, the two companies today signed an exclusivity agreement until 1 April 2011, under which break fees would be payable if either company fails to sign an asset sales agreement.

Pursuing this deal is aligned with Shell’s strategy to concentrate its global manufacturing portfolio on larger and more sophisticated assets.

In addition to the proposed sale of the assets, which would be expected to close by mid 2011, the two companies would enter into an exclusive five year crude supply contract by Shell to Essar and into long-term agreements for the supply of products in the UK by Essar to Shell.