Helsinki-based, privately held St1 produces biofuel and runs petrol stations across Scandinavia as well as in Poland, some of them purchased from Statoil and ExxonMobil.

St1 board Chairman Mika Anttonen declined to comment how the deal would be financed.

"The thing that makes the deal price high is oil. There is a lot of oil. Oil is expensive .... but it can be turned into cash quickly with one phone call," Anttonen told Reuters.

Shell has been looking for buyers for some of its refineries in Europe as a part of a plan to divest about 15 percent of its refining assets as margins are expected to remain weak for a long time in many developed countries, where industry experts say demand has peaked.

The Gothenburg refinery has simple-to-medium complexity, which means it can handle primarily low-sulfur, light crude from the North Sea but not high-sulfur crude.

It supplies the domestic market with fuels that traders say are niche products, such as diesel that does not freeze in extremely cold Nordic weather.