* St1 to pay $640 mln cash for refinery, 565 gas stations
* Sale price includes oil inventories
* Latest in string of refining, retail sales by Shell
(Adds analyst comment, background)
HELSINKI, Oct 27 Royal Dutch Shell (RDSa.L) has
agreed to sell its Finnish and Swedish operations, including a
refinery in Gothenburg, to Finnish firm St1 for $640 million, as
the oil major continues to cut back its downstream activities.
The deal includes an 87,000 barrels of crude oil per day
refinery, 565 filling stations and Shell's bulk fuel business in
the two countries, and a marine business in Sweden, the firms
said on Wednesday.
Helsinki-based, privately held St1 produces biofuel and runs
petrol stations across Scandinavia as well as in Poland, some of
them purchased from Statoil (STL.OL) and ExxonMobil (XOM.N).
All major international oil companies are focusing on their
upstream oil and gas production units and selling refineries and
forecourts, especially in Europe where fuel demand is dropping,
"In our view the reduction in exposure to European refining
is positive for the stock, as margins remain depressed due to
overcapacity and high inventories," analysts at Bernstein said
in a research note.
Analysts said Shell had achieved a good price, given the
large number of refineries on the market in Europe.
However, it was unclear whether the analysts had factored in
that the published price included the value of inventories at
the site. Companies such as Shell usually strip out the value of
inventories from announced deal prices.
"The thing that makes the deal price high is oil. There is a
lot of oil. Oil is expensive .... but it can be turned into cash
quickly with one phone call," St1 board chairman Mika Anttonen
He declined to comment how the deal would be financed.
Shell said last year it planned to divest about 15 percent
of its refining assets in developed countries, where industry
executives say demand has peaked.
The Gothenburg refinery supplies the domestic market with
fuels that traders say are niche products, such as diesel that
does not freeze in extremely cold Nordic weather.
(Reporting by Tarmo Virki and Terhi Kinnunen in Helsinki and
Tom Bergin in London; Editing by David Hulmes)