Royal Dutch Shell has told employees at its Stanlow refinery that India's Essar group has made a "credible" bid for the plant, a union official said.
A Shell spokesman confirmed that the Anglo-Dutch oil giant was in talks with Essar and had given the group until the end of February to come up with a firm bid.
"If by then we cannot get the right value for the assets and do the right deal, they will be withdrawn from sale," the spokesman said. "We are not considering closure or conversion into a terminal," he added.
Shell is reducing its involvement in refining, especially in Europe, to invest more money upstream in more lucrative oil and gas production.
With many refineries on the block in Europe, prices have come off the levels seen a few years ago but Stanlow could still be worth several hundred million dollars, analysts said. India's Energy Group controls two energy-focussed units, London-listed Essar Energy and India-listed Essar Oil.