Shell is evaluating the potential sale of its chemical assets in the U.S. and Europe as part of its broader strategy to streamline operations and focus on its most profitable businesses, according to The Wall Street Journal. The company has engaged Morgan Stanley to conduct a strategic review of its chemicals business, though no final decisions have been made.

Among the assets under consideration is Shell’s Deer Park facility in Texas, which produces a range of chemicals, including light and heavy olefins used in pharmaceuticals, detergents, adhesives, and wire coatings. The site is adjacent to a refinery that Shell previously sold its stake in. Other U.S. chemical operations under review include facilities in Pennsylvania and Louisiana, while in Europe, Shell has plants in the U.K., Germany, and the Netherlands.

Potential buyers for these assets could include private equity firms or Middle Eastern companies seeking to expand their presence in Western markets. While the review is in its early stages, the sale of some or all of these assets would align with Shell’s recent moves to optimize its portfolio and divest lower-margin businesses.

Since Wael Sawan took over as CEO at the beginning of 2023, Shell has been shifting its focus to its most profitable operations, including its core oil and gas businesses. This shift has included scaling back certain green-energy targets while reinforcing commitments to traditional energy sources. Shell’s chemicals division has long struggled with high capital costs and cyclical demand fluctuations, leading to financial losses in recent years that have dragged down the company’s overall performance.

The petrochemical industry has been facing challenges globally, with weak natural gas prices and rising production capacity creating an oversupply that has further pressured margins. As a result, Shell has already started offloading lower-margin chemical operations. In 2023, the company agreed to sell its chemicals park in Singapore to a joint venture that included mining giant Glencore and Indonesia-based Chandra Asri after conducting a similar strategic review.

Shell’s ongoing restructuring efforts are aimed at improving financial efficiency and maximizing shareholder value. The potential sale of its chemical assets is expected to attract interest from various investors, given the strategic importance of these facilities and their role in the broader supply chain for numerous industries.

According to the wall street journal, Investors are watching closely to see if Shell proceeds with a sale and how the company will further reshape its portfolio. Additional insights into Shell’s long-term strategy are expected to be shared at its upcoming investor day later this month, where executives are likely to provide more details on asset divestments and the company’s broader financial and operational outlook.