Financial Times: Shell to delay closure of refinery closure: “plan had prompted probes into possible antitrust violations by the Attorney General's office and the US Federal Trade Commission” (ShellNews.net)

By Doug Cameron in Houston and Carola Hoyos in London

Published: August 15 2004 17:10 | Last updated: August 15 2004 17:10

Royal Dutch/Shell has agreed to delay the planned closure of a refinery in California, buying time to find a buyer following pressure from US state and federal authorities to keep open a facility responsible for 2 per cent of the state's gasoline production.

The group announced last year that it would close the 72-year old plant at Bakersfield in October, claiming it had become uneconomic because of declining local oil production and tough environmental regulations.

However, Bill Lockyer, California's attorney general, announced late on Friday that he had reached agreement with Shell to keep the facility open until at least the end of the year. Shell's plan had become politically charged as California has the highest gasoline prices in the US, reflecting in part the state's more onerous environmental rules, and what Mr Lockyer called the “high concentration” of refinery ownership.

The closure plan had prompted probes into possible antitrust violations by the Attorney General's office and the US Federal Trade Commission. Shell had come under further pressure to reach a settlement after a report commissioned by the Attorney General's office maintained that the refinery could be run profitably.

Mr Lockyer said the state probe would continue, monitoring Shell's “good faith” pledge to find a buyer. Shell said it might keep Bakersfield open until March 31 2005 if it secured an exemption from new emissions rules that come into force at the year-end. Mr Lockyer said Shell was optimistic it could make the necessary compliance changes to the facility or secure exemption.