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Shell bows out of troubled French refinery

A logo is seen under a canopy of trees at a Shell petrol station in central London.

TOBY MELVILLE/REUTERS

Royal Dutch Shell PLC will not extend its six-month oil processing contract with the troubled refinery in Petit-Couronne, France, beyond mid-December, which will make the facility less attractive for potential buyers, the plant's union spokesman says.

The refinery stopped production on Jan. 10, before restarting operations in June under a deal with Shell, the former owner, to deliver 100,000 barrels a day of products.

"A representative of Shell said the company was not planning to extend the contract," the judicial administrator's spokeswoman said after a court hearing in Rouen.

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Shell was not immediately available to comment.

Unions say halting production means the plant, which was put under legal protection after its Swiss-based owner, Petroplus Refining Cressier SA, filed for insolvency, will be a lot harder to sell because of expensive restart costs, threatening 470 jobs.

"Shell refuses to extend the contract until the end of January to ensure a transition with Netoil," said Yvon Scornet, the unions' spokesman for the plant. Potential bidders have until Feb. 5 to submit offers.

So far only Netoil, a company led by Middle Eastern businessman Roger Tamraz, has submitted an offer while seven others have filled letters of intent to buy France's oldest refinery.

Netoil's offer includes an oil supply deal with BP PLC and an agreement with Hyundai Corp. to upgrade the plant.

"The court said Netoil's offer still lacked administrative authorizations and financial guarantees," the judicial administrator spokeswoman said.

The court has authorized activity at Petit-Couronne to continue until Jan. 16 to allow enough time to safely stop the refining units that have an output capacity of 160,000 barrels a day.

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Other candidates are Hong-Kong-based APG, the Libyan Investment Authority, Jabs Gulf Energy Ltd., an Iraqi company owned by Abu Dhabi's Hanna Al Shaikh Group, Iran's Tadbir Energy Development Group (TEDG), Swiss consortium Activapro AG and Terrae International SA, another Swiss company.

The court will convene again on Dec. 7.

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