UK energy company Shell is weighing the sale of its chemicals assets in Europe and the US, a move that could attract interest from private equity firms looking to expand in the sector, according to a report from The Wall Street Journal.
The energy giant has enlisted Morgan Stanley to conduct a strategic review of its chemicals operations, signalling a potential shake-up in its portfolio. While the process is still in its early stages, and no final decisions have been made, Shell’s Deer Park facility in Texas is reportedly among the assets under consideration.
With Shell pivoting back toward its core oil, gas, and biofuels businesses, private equity firms could seize this opportunity to acquire assets in a traditionally high-margin sector. PE buyers, known for targeting carve-outs from large corporations, may see value in these operations, especially as chemical production benefits from long-term industrial demand.
Middle Eastern entities, which have been actively expanding their footprint in Western markets, are also potential bidders. If a sale proceeds, it could follow the trend of sovereign wealth funds and PE firms acquiring energy and industrial assets to capitalise on ongoing market shifts.
The potential divestment aligns with CEO Wael Sawan’s cost-cutting strategy, which refocuses Shell on its most profitable sectors. Earlier this year, the company warned that trading in its chemicals and oil products division would decline due to seasonal demand fluctuations.
Shell has been systematically scaling back non-core operations. Last year, it sold its refining and chemicals hub in Singapore, one of the largest in the world. The Deer Park facility, which sits next to a refinery Shell sold to Mexico’s Pemex, could be the next to go.
Meanwhile, the company has also pulled back from offshore wind and is restructuring its power division, stepping away from renewables that were once central to its energy transition strategy.
Recent years have seen buyout firms acquiring refineries, midstream infrastructure, and even renewables projects as energy giants recalibrate their portfolios. The chemicals sector, while cyclical, remains a critical part of industrial supply chains, making it an attractive play for long-term investors.
