Royal Dutch Shell PLC (RDSB.LN) Wednesday said it is continuing negotiations with several potential buyers of the lubricant manufacturing plant at its refinery in Hamburg , Germany , but has decided to close fuel-processing facilities at the plant.

Shell has taken this decision after a search of almost two years failed to find a buyer for the entire Hamburg plant.

The refinery will continue to operate normally while the negotiations proceed until at least the second quarter of 2012, a Shell spokesman said. Shell will continue to operate and retain ownership of oil storage and distribution infrastructure at the facility regardless of the outcome of the sale process, he said.

"We will make every effort to minimize the impact on employees [to] as low as possible and provide our customers with consistently good service and high-product quality," said Peter Seifert, the chief executive of Shell Oil Germany .

The Hamburg refinery has the capacity to process 5.5 million tons of oil per year. It can produce propane, butane, gasoline, kerosene, white spirits, jet fuel, diesel, fuel oil and bitumen in addition to base oils and waxes, Shell said on its website.

The company is still talking to potential buyers of the base oil manufacturing and associated refining facilities, the spokesman said, without naming the buyers.

"Shell remains a leading player in Germany ...we continue to invest in our Rhineland refinery based in Cologne ," he said.

Shell launched the sale of the Hamburg facility, along with other refineries in Heide and Stanlow in the U.K. , in March 2009. It entered exclusive talks with Essar Oil Ltd. (500134.BY) over the three plants later that year, but failed to reach an agreement.

It sold the 90,000 barrels-a-day Heide refinery to private equity firm Klesch & Co. in October.

Other oil companies, notably France's Total SA (TOT), have been attempting to sell European refineries, many of which have been making little or no profit.
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