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Shell New Zealand has announced that it has begun a review of its downstream operations in a move which could also affect its future bunkering activities.

In a statement, the company said "Shell has commenced a strategic review to study the long-term ownership options of its downstream businesses in New Zealand."

Divestment of some or all of the downstream businesses are options under consideration, but no decisions have been made so far, the company said.

"Shell New Zealand will continue to provide our customers with the high level of service and quality products that they expect, and the safety of our employees remains our number one priority," Shell said.

The review does not include any upstream activities and will not affect any upstream positions held by Shell in New Zealand.

Shell said it will make an appropriate announcement when a decision is made, but the review is likely to take a number of months.

Shell New Zealand Holding Company Limited holds 17.14 percent (41,142,840 shares) in the publicly-listed New Zealand Refining Company Ltd., which owns and operates the Marsden Point refinery.

New Zealand Refining Company's 240 million shares are also held by BP, Exxon Mobil, Chevron, Emerald Capital, as well as approximately 3,000 private and institutional investors.

Each of the four oil majors has processing rights to a share of the refinery's capacity. This is calculated on the basis of their average market share over the preceeding three years. The theoretical effect of this is that the refinery is run as if it were four small refineries, with each company selecting and supplying its own crude diet and setting its own product output.

With their shared access to the country's sole refinery, the four majors have dominated the New Zealand oil and bunker markets for number of years, although there was a brief challenge in the late 1990s from Fletcher Challenge Energy. The company's oil and gas operations were acquired by Shell in March 2001 and its wholesale fuels business was purchased by Caltex.