Oil giant Shell to exit Pakistan after 75 years

KARACHI: Shell Petroleum Company said on Wednesday it would sell its 77 percent stake in Shell Pakistan Ltd., marking the oil giant’s exit from the South Asian country after 75 years of operations.

The move comes as Shell Pakistan has been struggling with losses in recent years, due to a number of factors including the devaluation of the rupee, and overdue receivables amid the economic slowdown in the country. Shell said it would start a sales process for its stake in Shell Pakistan, which includes all of the company’s downstream businesses and its 26 percent ownership of Pak-Arab Pipeline Company Ltd. Downstream businesses include mobility and lubricants.

“To support its intention to high-grade and simplify its portfolio, Shell Petroleum Company Ltd... has initiated a sales process to sell its 77.42% shareholding in Shell Pakistan Ltd,” Shell Pakistan said.

The company said in a notice to the Pakistan Stock Exchange that the planned sale is not expected to impact Shell Pakistan’s current business operations, which will continue as usual.

“The Board of Directors of Shell Pakistan Limited (SPL), in a meeting of its Board held on June 14, 2023, have been notified by the Shell Petroleum Company Limited (SPCo) of its intent to sell its shareholding in SPL,” the local company said in a stock filing of Wednesday.

“Any sale will be subject to a targeted sales process, the execution of binding documentation and the receipt of applicable regulatory approvals.”

In a separate statement, Shell Pakistan said the development was a reflection of “simplifying Shell’s portfolio.” “Shell Pakistan has been in the country for 75 years and has a substantial retail footprint and a strong lubricants business,” a spokesperson for Shell Pakistan said.

“Any sale will be subject to a targeted sales process, the execution of binding documentation and the receipt of applicable regulatory approvals. Shell is seeing strong interest from international buyers.”

Shell has been divesting assets in recent years as it focuses on its core businesses. In 2022, the company raised $2.1 billion from divestments, compared to $15.1 billion in 2021.

The company’s new CEO, Wael Sawan, has announced plans to ramp up Shell’s dividend and share buybacks while keeping oil output steady into 2030. Shell is also conducting a strategic review of energy and chemicals assets on Bukom and Jurong Island in Singapore.

Pakistan has seen several multinational companies exit in the last few years. Shell, one of the oldest multinational companies in Pakistan, operates more than 600 fuel stations and has been in the country for 75 years, said the statement.

Shell Pakistan stock surged by the daily limit of 7.5 percent to their highest close in three months.