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Shell (RDS.A) to Shut Off Louisiana Convent Refinery Next Week

Zacks.com logo Zacks.com 11/26/2020

Per a Reuters article, Royal Dutch Shell Plc. RDS.A is likely to commence the shutdown of its Convent Refinery in South Louisiana by early next week due to the oil giant’s unsuccessful attempt to find a viable buyer for the facility.Earlier this month, Shell announced its intention toclose down the Convent Refinery due to slumping fuel demand as a consequence of the pandemic.

The decision is in sync with the company’s plans to limit its number of operational refineries from 14 to 6 by 2025 as part of its strategy to shift to alternative energy. The remaining facilities will have integrated oil refineries and petrochemical plants.

Further, the currently Zacks Rank #3 (Hold) Shell plans to invest in a core set of integrated manufacturing sites for a carbon-neutral future. Per management, a further association between these core sites and the company’s trading hubs along with the production of chemical substances and other products adaptable to a low-carbon environment bodes well. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

The Convent facility, located along the Mississippi River midway between Baton Rouge and New Orleans, has a refining capacity of 211,100 barrel a day with about 700 employees. Following the shutdown, Shell will prioritize its workers’ wellbeing by opening a selective voluntary severance program. This will enable workers to seek employment within and outside the company.

The above strategic decision was made the amid refinery shutoffs in the United States by downstream service providers like Marathon Petroleum Corporation MPC, PBF Energy PBF and Phillips 66 PSX. While some facilities are being shuttered permanently, others will be transformed into renewable diesel plants due to shrinking oil demand. On its part, Shell wants to reserve its refineries with petrochemical segments including the one in Louisiana and aims to become a net zero-emission company for a low-carbon future.

Company Profile

Shell is one of the primary oil majors — a group of U.S. and Europe-based big energy multinationals — with global operations. The company is fully integrated as it participates in every aspect related to energy, right from oil production to refining and marketing.

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