EU launches probe into Shell base oil plant acquisition by Nynas

The European Commission has launched an in-depth investigation into the planned acquisition by Nynas of refinery assets at Harburg from Shell Deutschland Oil.
The commission’s initial investigation revealed “possible competition concerns in the markets for naphthenic base oils, naphthenic process oils, and transformer oils, where the merged entity would have very high market shares” in Western Europe.
The commission, under EU merger regulations, has until August 8 to make a final decision on whether the merger would significantly impede effective competition in Western Europe.
The transaction would leave the merged entity as the only producer of naphthenic base oils in Western Europe, the commission says.
“The proposed merger would remove the only competing producer of naphthenic base oils” in Western Europe, EU competition commissioner Joaquín Almunia says.
Nynas, a joint venture between Petróleos de Venezuela and Neste Oil, produces bitumen and a range of oils, including naphthenic base oils for industrial lubricants.
The JV is purchasing only the base oil manufacturing plant that forms part of Shell Deutschland’s Harburg refinery. Shell would keep the rest of the refinery.
The new Harburg production plant will be a core site for Nynas with an annual production of specialty oils by up to 330,000 tons, representing a 30% increase in the company’s production of specialty oils. With the strategic take-over of Shell’s Harburg production facilities, Nynas will grow with approximately 220 staff members over the next three years.
“This is an important step forward in Nynas’ strategy to grow,” the company stated in a press release issued at that time. “It will allow us to quickly meet the growing demand from our customers globally,” according to Nynas President Staffan Lennström.
“A new hydrogen unit and an extensive conversion programme will transform the premises into a world class stand-alone Naphthenic Specialty Products refinery,” he said when the purchase agreement with Shell was made public.
The take-over was based on a 25-year lease agreement for the Harburg base oil manufacturing plant and some associated refining facilities. The take-over by Nynas comprises two phases.
In phase 1, after European Commission clearance, implementation and completion, the long-term lease agreement will come into effect. At this stage Nynas will take over operation of the base oil unit and associated refining facilities, i.e. bitumen assets, tank farms and jetties on the southern part. Approximately 90 people will be employed by Nynas from the start of phase 1.
In phase 2, around mid-2014, Nynas will start to operate the modified and now self-sustained and enhanced specialty oils refinery on the southern and northern part. At this stage, it is expected that approximately another 130 people will be employed by Nynas.
Nynas will not take over any customers, sales or marketing assets from Shell with this agreement.