ROYAL DUTCH/SHELL is in talks with the US buyout firms Texas Pacific Group and Bain Capital that could lead to the sale of its liquefied petroleum gas business for an estimated $3 billion (£1.6 billion), The Times has learnt.

The struggling oil company is thought to be holding preliminary discussions with several interested parties and could seek to circumvent a full-blown auction by agreeing a sale quickly and quietly.

Since it announced a “strategic review” of the maker of liquefied petroleum gas (LPG), Shell has received many expressions of interest from private equity firms.

The company is understood to be holding discussions with the most interested parties before deciding how to proceed with the sale process, which is part of a broader disposal programme.

Shell hopes to complete the sale in the next three to four months.

In September Shell announced plans to sell up to $12 billion worth of its peripheral businesses to help to finance $45 billion of capital investment over the next three years, as it seeks to boost its stagnant exploration and production operation.

Kohlberg Kravis Roberts & Co, the US buyout firm, and Goldman Sachs, are understood to have teamed up to bid for the LPG business and are understood to be in discussions with Shell at present.

Candover and JP Morgan Partners, the private equity firms that jointly acquired part of ABB’s oil, gas and petrochemicals business last year, are also expected to be among the interested parties.

Shell’s LPG unit is headquartered in London and sells four million tons of liquefied gas a year to about 50 countries, giving it a 3 per cent share of the global market.

The gas can be used to fuel ovens, fridges and barbecues, as well as to power vehicles and heaters.

The company, which made earnings before interest, tax, depreciation and amortisation of $400 million in 2003, employs 4,000 staff and is led by Rob Routs, a managing director of the Shell group.

Shell is also looking to sell Basell, the plastics joint venture it owns with BASF, the German chemicals company. Bain Capital, which is part of a consortium that recently acquired Warner Chilcott, the Northern Irish drugmaker, is also among the buyout firms reported to be interested in Basell, which has an estimated price tag of about $5 billion. Texas Pacific is best known as the joint owner of Debenhams and controller of Burger King.

Shell was forced to reduce the number of its reported proved oil reserves by nearly a third last year, through five downgrades, leaving it with about 13.5 billion barrels. The company also gave warning that there could be a further downgrade because it was only about 60 per cent the way through auditing its reserves, using its revised guidelines.

Shell is replacing its century- old dual Anglo-Dutch ownership structure with a single company, in an attempt to convince the City that the failures of communication that led to the overstatement of the reserves, will not happen again.

All parties declined to comment on the sale of LPG.

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