Shell plc SHEL, in a move to align with its strategy of reducing dependence on conventional crude oil refining and investing in high-value products, has initiated a major conversion of its Rheinland refinery. The said refinery is located at the Wesseling site and will adapt to the growing demands of the European market. By the first quarter of 2025, crude oil processing will be phased out, and the site will be pivoted to produce high-quality Group III base oils, which are essential for lubricants in engines and transmissions.

SHEL’s Phased-Out Shift

Since Europe is moving toward cleaner and sustainable energy, the demand for conventional petroleum products is declining; therefore, SHEL’s shift toward high-grade lubricants defines its adaptability. Although the Wesseling site is undergoing this transformation, the Godorf site will continue with its crude oil refining operations, and the operations at the site may temporarily be paused due to scheduled maintenance. SHEL’s commitment to carrying out the transformation in phases will minimize the impact on Germany’s energy supply and will also enhance efficiency.

SHEL's Future in Germany

With SHEL transforming its refinery operations in Germany, the country’s refining landscape is tightening. BP p.l.c. BP too is all set to reduce its activity at the Gelsenkirchen refinery, leaving Miro as the biggest oil processor in the country. If the transformation goes as planned, the Rheinland site will soon be able to produce 300,000 tons of base oil annually and meet the major demands of the European market.

SHEL’s Zacks Rank and Key Picks

London-based Shell plc is one of the primary oil supermajors - a group of the U.S. and Europe-based big energy multinationals with operations that span almost every corner of the globe. Currently, SHEL has a Zacks Rank #3 (Hold).

Investors interested in the energy sector might look at some better-ranked stocks like Archrock, Inc. AROC and Talos Energy Inc. TALO. While Archrock currently sports a Zacks Rank #1 (Strong Buy), Talos Energy carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Archrock is a provider of natural gas contract compression services and a supplier of aftermarket services of compression equipment. The Zacks Consensus Estimate for AROC’s 2024 earnings indicates 59.42% year-over-year growth.

Talos Energy LLC engages in exploration, development and production of oil and natural gas properties. TALO’s expected EPS (earnings per share) growth rate for the next quarter is 600%, which compares favorably with the industry's loss of 39.58%.

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