Shapir Extends Consulting Deal With Ashdod Oil Refinery Despite Regulator Opposition

The board of the Ashdod Oil Refinery has extended Shapir Engineering's consulting agreement for three more years, until August 2029, despite the Israeli Concentration Committee's recommendation against approving Shapir's acquisition of control over the refinery. The committee warned that Shapir's control would significantly increase market concentration, placing it among Israel's most dominant economic players. Shapir, which currently owns 10% of the refinery's shares acquired in 2023 after its split from Paz, holds options that could raise its stake to 65% by 2028. However, exercising these options requires regulatory approval, which has not yet been granted.

Shapir has requested a meeting with the committee to negotiate conditions for obtaining the necessary permits. Meanwhile, other interested parties have refrained from commenting on potential bids for the refinery. Zohar Levy, holding 13.2% via Summit, declined to comment on speculation. In July, Yogev Gabry was appointed CEO of the refinery, replacing Ronen Yehezkel after one year.

The consulting agreement, which includes advising on CEO selection, has raised questions among shareholders about whether it should have been approved by a general meeting rather than just the board. This issue may be reviewed by the Israel Securities Authority. The refinery recently reported strong financial results, doubling its operating cash profit to $54 million in Q2 and $92 million in the first half of 2024, despite operational challenges and a 7.6% drop in its stock price.

The company also faced shareholder concern after omitting mention of a planned power station in its latest presentation, though it confirmed the project remains on track. The refinery emphasized that the consulting fees are for services rendered and not related to Shapir's option rights.