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Shell and Vitol have confirmed that they have reached a binding agreement regarding the sale of Shell's Australia downstream businesses (excluding Aviation) to Vitol for a total transaction value of approximately A$2.9 billion (US$2.6 billion).

The sale covers Shell’s Geelong Refinery and 870-site retail business - along with its bulk fuels, bitumen, chemicals and part of its lubricants businesses in Australia. It also includes a brand license arrangement and an exclusive distributor arrangement in Australia for Shell Lubricants. It does not include the Aviation business, which will remain with Shell Group, or the lube oil blending and grease plants in Brisbane, which will be converted to bulk storage and distribution facilities. The majority of Shell’s downstream staff in Australia will continue to operate the business under its new owner.

Shell’s upstream operations in Australia, in which it will continue to invest, are not impacted by this announcement.

Ben van Beurden, Shell’s Chief Executive Officer, said: “Australia remains important to Shell, but we are making tough portfolio choices to improve the company’s overall competitiveness.

“Our customers will continue to benefit from the quality associated with the Shell brand and we are confident Vitol will invest in and grow the business.”

Vitol President and CEO Ian Taylor said: "This is an exciting acquisition for us, a good company led by an experienced management team and underpinned by the value of the Shell brand. Australia is a growing economy and we look forward to working with the management team to strengthen and grow the business."

Shell’s Australia Country Chair, Andrew Smith, acknowledged the enormous contribution that Shell’s downstream employees had made to the company over the past 113 years.

Smith said: "Like any business that operates for over a century, Shell’s business has changed over the years, and we are pleased to have found a buyer for the Geelong Refinery. Through the brand agreement reached with Vitol, the Shell brand will continue to be displayed across the company’s service station network and customers will still have access to quality Shell fuels and lubricants.

"Shell will continue to play a major role in the development of Australia’s expanding liquefied natural gas industry, and we look forward to strengthening our presence in the years ahead."

The deal is subject to regulatory approvals and is expected to close in 2014.

Recent downstream divestments by Shell include the sale of refineries in the UK, Germany, France, Norway and the Czech Republic; downstream businesses in Egypt, Spain, Greece, Finland and Sweden, as well as the creation of a downstream joint venture – with Vitol and other partners – across Africa, and the planned sale of some downstream businesses in Italy and Norway.