Royal Dutch Shell head office

Royal Dutch Shell’s subsidiary Shell CAPSA has divested its downstream business in Argentina to Brazilian biofuels producer and fuels distributor Raízen in a $916m deal.

In April, Shell signed an agreement for the sale as part of its $30bn divestment programme. The divestment comes after the company conducted a strategic review of its downstream business in Argentina in August 2016.

The assets acquired by Raízen include liquefied petroleum gas, marine fuels, aviation fuels, bitumen, chemicals and lubricants businesses, as well as supply and distribution activities in the country.

“This sale offers the opportunity to consolidate a regional partnership between Shell and Cosan.”

In addition, Raízen bought a refinery in Buenos Aires and around 665 retail stations as part of the transaction.

Despite the sale, the divested businesses will continue their relationships with Shell through various commercial agreements.

Raízen was established by Shell in a 50:50 joint venture with Cosan in 2011. The company is already responsible for management of 6,400 Shell service stations and 950 Shell Select convenience stores.

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In a statement, Shell said: “This sale offers the opportunity to consolidate a regional partnership between Shell and Cosan, and allows Shell to continue to benefit from Argentina’s growing downstream market.

“The Shell brand will remain prominent in Argentina through a licensing agreement with Raízen, meaning customers will continue to have access to high-quality, Shell-branded products and services.”

The transaction does not comprise Shell’s upstream interests in the Vaca Muerta shale formation in the country as the company intends to tap long-term growth potential in the shale resources.

In connection with the acquisition, Raízen paid $470m to Shell and is expected to make the remaining payments by next December.