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Shell backs out of Malaysian refinery business

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By Jillian AmbroseFeb 2016

Royal Dutch Shell will sell a majority stake in its Malaysian refining business as part of a strategy overhaul to combat plummeting profits.

The Anglo-Dutch firm said it has agreed to sell a 51pc stake in the business for $66.3m to engineering group Malaysian Hengyuan International.

The latest retreat comes alongside plans to sell its marketing business in Denmark and Norway, its LPG businesses in France and a 33.24pc stake in Showa Shell Sekiyu KK.

Shell’s latest financial report due out on Thursday is expected to make clear the heavy toll the ongoing oil price rout has taken on the firm, with full-year profits expected to be 48pc lower than the year before.

In response to dwindling oil prices, Shell is preparing to slash jobs and cut costs, while overhauling its global focus.

“The sale is consistent with Shell’s strategy to concentrate its global downstream footprint and businesses where it can be most competitive,” the company said.

Nonetheless, Shell said that Malaysia “continues to be an important country”, and that it would continue to invest in its growing retail fuels and lubricants interests there.

Shell is expected to conclude its recent £40bn takeover of gas rival BG Group within the next two weeks, which it says will provide a “springboard” back to profitability.

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