By Rick Carew 

Royal Dutch Shell PLC is looking to sell its stake in a Chinese oil lubricants business in a deal that could fetch up to $500 million, as the Anglo-Dutch energy major sheds assets across the globe amid falling oil prices.

The company has started a sale process for its 75% stake in the Tongyi oil lubricants joint venture, with bids expected to come in between $350 million and $500 million, according to people familiar with the situation, offering prospective buyers a rare majority stake in a Chinese company.

Blackstone Group LP appears to be in a strong position for first round bids among the private-equity firms looking at the Chinese operation, according to these people. The U.S. private-equity firm is working with the founder of the Tongyi joint venture, Huo Zhenxiang, to craft a joint bid, they said. Mr. Huo owns the 25% stake in Tongyi not owned by Shell.

Shell's management is looking to raise cash and slim down to boost returns as falling oil prices pressure results. When Shell Chief Executive Ben van Beurden took the helm in January he laid out plans to sell $15 billion of assets by the end of 2015. He has turned his focus away from growing investments and toward improving free cash flow and raising stock dividends to appease investors.

The company's shares have declined by more than 5% this year.

Shell hired China International Capital Corp. to sell its 75% stake in Shell's Tongyi brand of oil lubricants for cars, motorcycles, and other vehicles, according to people familiar with the situation. The Beijing-based investment bank is canvassing potential buyers for the business, and private-equity firms and industry players are expected to participate in the first-round bidding, these people said.

The business could be particularly interesting to deal makers because it is a rare slice of China's energy industry where foreigners can own controlling stakes.

Shell unveiled the acquisition of the Tongyi stake in September 2006 for an undisclosed price. Now, it is looking to sell the local lubricants business as it focuses on expanding other brands. Shell operates the largest lubricant business in China among international oil companies. The company markets lubricants under its own Shell Helix brand for standard gasoline vehicles and the Shell Rimula brand for diesel vehicles.

If a sale is completed, Shell will continue to have substantial operations in China. Among those are a network of around 1,000 retail fuel stations, natural-gas exploration projects in western China's Sichuan province, and an investment in the Nanhai petrochemicals complex that is a joint venture between Shell and China National Offshore Oil Corp., known as Cnooc.

Write to Rick Carew at rick.carew@gmail.com

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