Shell inks deal to sell refinery, related assets to Tesoro

Shell Oil Products US announced January 29 that it has signed agreements to sell its Los Angeles Refinery, Wilmington Products Terminal, and approximately 250 retail sites and supply agreements in and around Los Angeles and San Diego to Tesoro Corporation. The proposed sale is part of Shell's previously announced ongoing strategy to streamline and concentrate its downstream portfolio. The transaction is expected to close in mid-year 2007, assuming all regulatory approvals are obtained and other conditions to closing are satisfied.

The Los Angeles Refinery, which began operations in 1923 as California Petroleum Corporation, has a crude throughput capacity of approximately 97,500 barrels per day. Shell acquired an ownership interest through a joint venture in 1998 and became sole owner in 2002.

Commenting on the proposed sale of the assets, Rob Routs, Royal Dutch Shell executive director downstream, said: "This sale represents good value for our shareholders, and because Tesoro is acquiring all assets as a going concern, it also secures jobs and energy supplies for people in Southern California. The deal we have negotiated comes as a result of a proactive approach from Tesoro to which we have reacted positively as it aligns with our ongoing strategy of managing our downstream portfolio."

The divestment is consistent with Shell's strategy of managing its portfolio to deliver maximum value to customers and shareholders. The retail sites to be sold to Tesoro will remain Shell-branded, and Shell's commitment to further build on its strong branded presence in California and elsewhere will continue.

Tesoro has advised Shell that it intends to offer employment to most, if not all, of approximately 500 affected Shell employees at the refinery, terminal and certain employees within Shell's retail organization. Tesoro has also expressed that it will abide by the collective bargaining agreement covering the Los Angeles Refinery employees.

Shell Oil Products US will honor dealers' agreements and rights under the Petroleum Marketing Practices Act and any other applicable state or federal laws. Per the terms of agreements with multi-site operators (MSO), the company plans to assign some MSO contracts to Tesoro. Some supply contracts that Shell has with its wholesalers and open dealers in the area will be assigned to Tesoro.