Bloomberg.com: Shell Offers to Sell $103 Mln Stake in Malaysian Unit (Update2)

July 8 (Bloomberg) -- Royal Dutch/Shell Group, Europe's second-largest oil company, offered to sell a 20 percent stake in its Malaysian oil refining unit for as much as 390 million ringgit ($103 million), its second sale of Asian assets this week, bankers and investors said.

Shell, based in London and The Hague, is offering 60 million shares in Shell Refining Co. for 6.20 ringgit to 6.50 ringgit each, they said, asking not to be identified. The company may sell an additional 12 million shares, depending on demand, they said.

The sale follows Shell's agreement Monday to sell a 14.95 percent stake in its Japanese refining unit to Saudi Aramco, adding to more than $3.5 billion of asset sales announced this year. The company is seeking to improve the profitability of its refining business and focus on fewer countries. Other properties sold include an oil field in Angola and a refinery in Delaware City.

Shell may be selling some of its refining stakes now because a 54 percent increase in average refining margins, or the profit from turning crude oil into fuel, in the past year has made the assets more attractive to investors.

``Long-run refining margins will be in the region of $2.50 a barrel,'' said Pieter Bruinstroop, who helps oversee $2.3 billion in resource company investments at APS Asset Management Ltd. ``They are presently about $8 a barrel. If you can capitalize on some of that it seems like a good thing to do at the present time.''

Shell owns 225 million shares, a 75 percent stake in the Malaysian unit, according to the company's annual report.

Shell Overseas Holdings Ltd., which owns the stake, cannot comment on the share sale at this stage, said Lina Yap Abdullah, a Shell spokeswoman in Kuala Lumpur. CIMB Bhd. is arranging the sale. The investment bank is unable to comment at this point, Zarina Ibrahim, a Kuala Lumpur-based CIMB spokeswoman, said.

Shares of Shell Refining Co. were unchanged at 6.75 ringgit as of 12.06 p.m. in Kuala Lumpur.

To contact the reporter on this story:

Khoo Hsu Chuang in Kuala Lumpur at hckhoo@bloomberg.net.

To contact the editor responsible for this story:

Bill Austin at billaustin@bloomberg.net.

Last Updated: July 8, 2004 00:23 EDT