• Shell and P66 own around 61% of Explorer, in early stages of sale effort, sources say
  • Energy Transfer and MPLX could also sell if buyers willing to pay high price for whole pipeline, sources say
  • Explorer among most important US refined products pipelines

NEW YORK, July 29 (Reuters) - Shell SHEL.L and Phillips 66 PSX.N are working on a potential sale of their stakes in the company which owns the Explorer refined products pipeline, in a deal that could value the major piece of U.S. energy infrastructure at around $3.5 billion, people familiar with the matter said.

The move reflects how heightened demand for energy infrastructure assets, especially from financial buyers, has boosted valuations and encouraged existing owners to sell and reinvest proceeds in core or higher-growth parts of their businesses.

Shell and Phillips 66 currently hold around 61% ownership of the legal entity which holds the pipeline, which transports gasoline, jet fuel and other fuel products from Texas, through the Midwest, to end points including the outskirts of Chicago.

Investment bankers at Greenhill, a Mizuho 8411.T affiliate, and RBC Capital Markets RY.TO, have been retained to run an auction process for the stakes, with deliberations currently at an early stage.

Energy Transfer ET.N and MPLX MPLX.N own the rest of Explorer. While prospective buyers are initially being sounded out on the Shell and Phillips 66 pieces, the other stakeholders could ultimately contribute their holdings if strong interest is shown in acquiring the whole pipeline, the sources said.

The sources cautioned there was no guarantee of any deal involving the Explorer stakes, and spoke on condition of anonymity to discuss private negotiations.

Shell, Phillips 66, and MPLX declined comment. Explorer, Energy Transfer, Mizuho and RBC did not respond to comment requests.