Shell Plans Major Restructuring of Chemical Business Amid Ongoing Losses

On March 25, Shell announced a significant restructuring of its global chemical operations, seeking strategic partners for its chemical portfolio in the United States and potentially closing some or all of its chemical operations in Europe. This move comes as the company grapples with persistent challenges in the market.

Earlier this month, media reports suggested that Shell was considering selling its chemical assets in both the U.S. and Europe, although the company initially declined to comment. In its statement, Shell emphasized the goal of “unlocking more value from a stronger chemical asset portfolio” by exploring strategic opportunities in the U.S. and selectively shutting down high-cost assets in Europe.

The restructuring plan is set to be completed by 2030. Shell CEO Sawan stated the intent to reduce capital investments in chemicals and redirect those funds towards more competitive ventures. “In the face of ongoing market pressures, we will continue to optimize our assets and proceed with closures when necessary,” he added.

Shell has faced declining sales and profits in recent years, with 2024 net profits dropping 16% to $23.7 billion. The chemical division has been particularly hard-hit, reporting losses for three consecutive years. In 2024, the chemical segment generated $9.6 billion in sales, remaining flat compared to the previous year, while recording an annual loss of $392 million, although this was a slight improvement from 2023.

As a major producer of essential chemicals like ethylene, propylene, and aromatics, as well as intermediates such as styrene and propylene oxide, Shell operates large integrated petrochemical complexes in Germany and the Netherlands, along with significant facilities in the U.S. and Canada.

In contrast, Shell recently announced plans to expand its petrochemical business in China. In January, a final investment decision was made for the Huizhou Phase III ethylene project in partnership with CNOOC, which will construct a 1.6 million-ton per year ethylene cracker and various downstream units, aiming for completion in 2028.

Shell's goal is to become a leading player in natural gas and liquefied natural gas. The company projects a 4%-5% annual increase in LNG sales by 2030, with upstream and integrated gas production rising by 1% per year, while maintaining crude oil production at 1.4 million barrels per day and reducing carbon intensity.