- Shell Pakistan announced the sale of its 77% stake in the company as its parent company, Shell Petroleum Company, exits Pakistan.
- The decision was influenced by financial difficulties faced by Shell Pakistan in 2022, including exchange rate fluctuations and overdue payments, coinciding with Pakistan’s economic slowdown.
- The sale includes all downstream businesses of Shell Pakistan, such as Mobility and Lubricants, and its 26% ownership in Pak-Arab Pipeline Company Ltd (PAPCO).
Shell Pakistan (SHEL.PSX) announced on Wednesday that its parent company, Shell Petroleum Company, would be departing from Pakistan by selling its 77% stake in the local business.
The decision was prompted by Shell Pakistan (SPL) experiencing losses in 2022 due to factors such as fluctuating exchange rates, the devaluation of the Pakistani rupee, and overdue payments.
This move coincides with Pakistan’s ongoing financial crisis and economic slowdown.
In an email to Reuters, a Shell Pakistan spokesperson stated:
“To streamline and simplify its portfolio, Shell Petroleum Company Ltd… has initiated the process of selling its 77.42% ownership in Shell Pakistan Ltd.”
The spokesperson clarified that this sale includes “all of SPL’s Downstream businesses and SPL’s 26% stake in Pak-Arab Pipeline Company Ltd (PAPCO),” which encompasses Mobility and Lubricants.
SPL is currently listed on the Pakistan Stock Exchange and assured that its regular business operations remain unaffected by this announcement.
According to a notice sent to the exchange, Shell Petroleum Company informed its board of directors about its intention to sell the stake during a meeting held on June 14.
The spokesperson emphasized that Shell aims to maintain transparency throughout the sales process.
The spokesperson stated, “These decisions are made after careful consideration, and Shell’s primary focus now is to ensure a secure and seamless divestment while upholding safe and reliable operations.”
In 2022, Shell generated $2.1 billion from divestment proceeds, compared to $15.1 billion in 2021, which included the divestment of Permian assets.
Additionally, Shell revealed that it is conducting a strategic review of its energy and chemicals assets located in Bukom and Jurong Island, Singapore.
Newly appointed CEO Wael Sawan unveiled plans to increase the company’s dividend and share buybacks while maintaining steady oil production until 2030.
*We have reached our for an official statement.
About Shell Pakistan
Shell Pakistan Limited (SPL), a subsidiary of Shell plc and an established player in South Asia for more than a century, is a prominent oil and gas company in Pakistan.
SPL’s main business in the country revolves around downstream operations, including retail marketing, lubricants, and aviation. However, on June 14, 2023, Shell announced its decision to divest its stake in Pakistan.
SPL is listed primarily on the Karachi Stock Exchange, with secondary listings on the Lahore and Islamabad Stock Exchanges.
The company operates 782 petrol pumps, while Cnergyico has 982, the state-owned Pakistan State Oil Co. operates 3,500, and Total Parco Pakistan Ltd. has 800.
In the aviation sector, Shell Pakistan Limited’s presence at five major airports enables it to supply both domestic and international airlines, positioning Shell Aviation as the second-largest jet fuel supplier in Pakistan, commanding over 30% of the market share.
As for lubricants, SPL is the largest marketing company in Pakistan, capturing more than 20% of the total lubricant market.
The lubricant business is one of Shell’s most profitable sectors globally, focusing on selling key brands such as Rimula, Helix, and Advance to high street traders, transportation companies, and industrial and power sector customers.
In the retail segment, SPL holds the position of the second-largest oil marketing company (OMC) in Pakistan, with a 25% share of the white oils market. The company operates over 800 retail outlets.
SPL also has a 26% equity interest in Pakistan Refinery Limited (PRL), the country’s third-largest refinery with a refining capacity of 2.1 million tons per annum. PRL has undertaken significant upgrade and modernization projects to improve profitability and meet government mandates.
Furthermore, SPL holds a 26% equity interest in Pak-Arab Pipeline Company Limited (PAPCO), established in 2001 to construct and operate a vital white-oil pipeline spanning 840 kilometers from Karachi to key markets in central and northern Pakistan.
The pipeline has been operational since Q1/2005 and plays a crucial role in ensuring business continuity and transportation safety in the sector.
Please note that the information provided is based on the given text and may not reflect the latest developments.
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