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Energy investment company Infratil Ltd, in consortium with the New Zealand Superannuation Fund, has announced that it has entered into exclusive negotiations with Shell over the possible acquisition of Shell New Zealand’s refining and downstream businesses, which includes the company's marine fuel operations.

In a statement, Infratil said the scope of the proposed transaction includes but is not limited to a 17.1% stake in the New Zealand Refining Company, Shell New Zealand’s supply and distribution infrastructure and it’s retail and B2B fuel business.

"The consortium has submitted a non-binding conditional proposal to Shell and has entered into the final phase of due diligence.

"Discussions and negotiation will continue during November and further advice on the status of the discussions will be provided as material developments occur," the statement said.

Shell announced in February 2009 that it had begun a strategic review to study the long-term ownership options of its downstream businesses in New Zealand.

Shell New Zealand Holding Company Limited holds 17.14 percent (41,142,840 shares) in the publicly-listed New Zealand Refining Company Ltd., which owns and operates the Marsden Point refinery.

New Zealand Refining Company's 240 million shares are also held by BP, Exxon Mobil, Chevron, Emerald Capital, as well as approximately 3,000 private and institutional investors.

Each of the four oil majors has processing rights to a share of the refinery's capacity. This is calculated on the basis of their average market share over the preceeding three years. The theoretical effect of this is that the refinery is run as if it were four small refineries, with each company selecting and supplying its own crude diet and setting its own product output.

With their shared access to the country's sole refinery, the four majors have dominated the New Zealand oil and bunker markets for number of years, although there was a brief challenge in the late 1990s from Fletcher Challenge Energy. The company's oil and gas operations were acquired by Shell in March 2001 and its wholesale fuels business was purchased by Caltex.

Infratil is an owner and operator of businesses in the energy (mainly renewable), airport and public transport sectors. Its energy operations are predominantly in New Zealand and Australia. The company owns Wellington Airport in New Zealand and airports in Glasgow, Kent and Lübeck. Infratil’s public transport services are in Auckland and Wellington, New Zealand.

Background on Shell Downstream assets:

* 17.1% of listed company NZ Refining
* Access to refinery and pipeline capacity
* Ownership/access arrangements to joint national distribution network, including 13 nationwide terminals and shipping infrastructure
* 25% ownership of Loyalty New Zealand (FlyBuys) sales and distribution network including:
229 retail outlets
95 truck stops
Facilities at Auckland and Christchurch airports