California asks Shell not sell refinery units prior to turnaround

Washington (Platts)--4Jun2004

California's Attorney General's office, which is seeking to block Shell's
planned sale of its Bakersfield, California, refinery, has requested the oil
major show good faith by agreeing not to sell or market any of the refinery's
equipment or components prior to Oct 1, the refinery's scheduled shut-down
date. Attorney General Bill Lockyer is investigating the refinery's upcoming
closure, which he says could further constrict an already tight West Coast
petroleum market, driving up prices to motorists, farmers and businesses.

Shell announced the shut-down last November, saying a dwindling supply of San
Joaquin Valley crude made operating the 70,000 b/d refinery uneconomical. Last
week, Lockyer's office hired Malcolm Turner of Turner, Mason & Company, to
among other things, assess the saleability of the Bakersfield refinery.

In a June 2 letter, California Deputy Attorney General Margaret Spencer said
Turner would be contacting and interviewing potential buyers, in hopes of a
sale of the facilities on terms acceptable to Shell. "In order to afford Mr.
Turner the greatest possibility of success, we deem it essential that the
plant be maintained as a viable, integrated operation for as long as
possible," Spencer wrote. "We therefore request that Shell neither sell, enter
into an agreement to sell, nor make any effort to market any of the refinery's
equipment or components prior to Oct. 1...We would consider Shell's
cooperation in this regard as evidence of its good faith with regard to the
company's stated intention to entertain any reasonable offer to purchase." A
Shell spokesman could not immediately comment on the letter.

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