Nynas AB of Sweden, one of the global technical leaders in specialty oils, will take over full control and responsibility for Shell’s Harburg base oil manufacturing plant and some associated refining facilities of the Harburg refinery in Hamburg, Germany.
The agreement between the two companies will come into effect as the European Commission has cleared under the EU Merger Regulation the proposed acquisition to avoid higher prices for European consumers.
The Commission’s in-depth investigation showed that a closure of the Harburg refinery assets is the most likely scenario in the absence of the proposed transaction, the commission said in a statement.
This would significantly reduce the production capacity in the European Economic Area (EEA) market for naphthenic base and process oils, below EEA demand. Demand for these products in the EEA would then have to be met by imports and consequently higher prices for consumers due to import costs.
The Commission also found that the acquisition by Nynas has positive effects on competition, as Nynas would achieve significant reductions of variable costs for its additional supplies, which are likely to be passed on to consumers to some extent.
Naphthenic base and process oils are used in a variety of products (e.g. industrial rubber, adhesives, fertilisers), and for transformer oils (‘TFO’), which are used to insulate power transformers.
The new production plant will be a core site for Nynas with an annual production of specialty oils by up to 330,000 tons. This represents a thirty percent increase in the company’s production of specialty oils. With the strategic take-over of the Harburg production facilities Nynas will grow with approximately 220 staff members over the next three years.
According to Nynas president, Staffan Lennström, “The Harburg refinery will continue to produce as today but will, over the next 24 months, be converted into a stand-alone specialty oil refinery. A new hydrogen unit and an extensive conversion program will transform the premises into a world class stand-alone Naphthenic Specialty Products refinery”.
The take-over is based on a 25-year lease agreement for the Harburg base oil manufacturing plant and some associated refining facilities.
Nynas is a global technical leader and developer of premium specialty oils. The company is well positioned to grow with the market, strengthen its current business lines and explore future opportunities for sustainable use of oil. During recent years, Nynas has opened sales offices and distribution terminals in fast growing markets such as China, South Korea, India, Russia and several countries in Latin America.
