KUALA LUMPUR, 30 June 2015 – Following its Annual General Meeting for FY2014 today, the Shell Refining Company (Federation of Malaya) Berhad (“Shell Refining Company”) announced that it is further reviewing its current strategic options, given the recent uplift in industry margins.
“The current uplift in refining margins has relieved some of the time pressure in the near-term. It is in every shareholder’s interest to make a careful decision on either option. We don’t expect a decision in a few weeks’ time and this process may take a few more months. As soon as we are able to, we will call for a shareholder meeting on this matter,” explained Iain Lo, Chairman of the Shell Refining Company.
Following a structured review of its business, the Shell Refining Company Board of Directors had previously announced that it was investigating long-term options in the best interest of SRC and strengthening its financial performance.
“One thing remains certain: Continuing to operate the business as it is today is not a long-term option. The current refining margins was positively influenced by the lag in product pricing adjusting to crude pricing levels and delays in startup and stabilisation of new refining capacity in the region. Refinery margins remain uncertain and will be influenced by international supply and demand for petroleum products, and seasonal and cyclical factors,” explained Lo.
The company’s Board also cited its heavy debt load, the significant investment required to meet Euro 4 and Euro 5 compliance standards, as well as the challenged outlook of refining margins, as factors influencing its view that continuing the company in its current form is not a viable option.
In Q1-2015 the company posted revenue of RM2.5 billion for the quarter, 38% lower than the same period last year. The decrease was attributed to lower product prices in 2015.
“Maintaining strong operational performance and maintaining product quality will continue to remain the refinery’s key focus area to maximize margin opportunities. In fact, the SRC has planned major maintenance turnaround in the third quarter of 2015 for approximately seven weeks,” said Amir Bakar, Managing Director for the Shell Refining Company.
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About Shell Refining Company
Shell Refining Company (Federation of Malaya) Berhad was formed in 1960 as a public listed company. It currently has 49% public participation and 51% held by Shell Overseas Holding Limited. The Company operates with state-of-the-art technology and is the key petroleum products supplier to Shell Downstream businesses in Malaysia. The oil refinery at Port Dickson has a licensed production capacity of 156,000 barrels per day and produces a comprehensive range of petroleum products, some 90% of which are consumed within Malaysia.