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Shell has announced that it will sell its 51% stake in the Shell Refining Company (SRC) in Malaysia to Malaysian Hengyuan International Limited (MHIL) for US$66.3 million (RM277.3 million), subject to regulatory approval. The transaction values SRC at RM551 million, or RM1.80 a share, which is below market value.

A statement from the oil major said that it is MHIL’s intention for SRC to invest in the upgrades needed to meet the Euro 4M and Euro 5 requirements. MHIL is a unit of private Chinese refiner Shandong Hengyuan Petrochemical Company.

Shell Malaysia Trading said that it will ensure security of supply to its retail and commercial customers in Malaysia and honour other existing commitments through an existing comprehensive supply strategy that includes a long term offtake from SRC.

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Reuters reports that Shell’s oil refinery at Port Dickson has a capacity of 156,000 barrels-per-day with 90% of its oil products consumed within Malaysia. Shell has been exploring options for SRC including the sale of the Port Dickson refinery or converting it to a storage terminal since at least January 2015, it added.

The Malaysian sale is consistent with Shell’s strategy to concentrate its global downstream footprint and businesses where it can be most competitive. “Malaysia continues to be an important country for Shell. Shell is the leading retail fuels and lubricants provider and continues to invest in growing these businesses in the country,” it added.

A sharp drop in oil prices has seen Shell selling assets and cutting cost and jobs to weather the storm. It recently sold downstream businesses in Australia and Italy; a number of retail sites in the UK; and conducted an IPO for Shell Midstream Partners L.P. Shell has also agreed to the sale of its marketing business in Denmark and Norway, its LPG business in France and a 33.24% stake in Showa Shell Sekiyu KK.