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Shell Chemicals Moves Toward Globalization

November 11, 2005

Sometimes less is more. Nearly five years ago, Shell Chemicals, a conglomerate of more than 70 companies, developed a new operating model and has so far divested more than 40% of its assets, decreased its businesses by half and reduced its sites from 54 to 18 to create a better portfolio. The company also shed its workforce from 21,000 to 9,000 through downsizing and divestitures. Now, all that work is starting to pay off.

“We need to get back and be a top player, but we still have a lot of work to do,” revealed Fran Keeth, president and chief executive officer of Shell Chemicals LP (U.S. operations), executive vice president of customer fulfillment/product business units of Shell Chemicals and deputy chief executive officer of Shell Chemicals Ltd. “As a global company, we aim to be very streamlined, with a simpler structure and a deep layer of process optimization around the world.”

Executives said the company’s globalization will be finished by April of 2003. Goals include an annual 3% decrease in unit costs, $700 to $800 million a year in capital investments, 40-60% of advantaged feeds globally and 70% of integrated feeds. With an eye on the rising use of petrochemical products in China, Shell Chemicals is also investing heavily in certain areas of the market as well as infrastructure in North America to meet future demands, including the integration of Shell’s joint venture with BASF, Basell, headquartered in Hoofddorp, The Netherlands with a regional office in Wilmington, DE.
“Shell is investing to 2008 to advance our (U.S.) feed cracking capabilities and interfacing our utilities and costs,” said Ms. Keeth.

The Gulf coast is of particular interest and expansion is underway for the Deer Park, TX and Yabucoa, Puerto Rico facilities. The Geismar, LA plant is also celebrating its 35th anniversary this year with increased linear alpha olefin (LAO) and alcohol capacity for detergent intermediates. For example, Procter & Gamble’s new Tide Quick Dissolving Powder detergent uses Shell’s Neolone 67 technology.
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