Saudi Aramco mulls bid for Shell’s Pakistan assets

KARACHI: Saudi Aramco is exploring a potential bid for Shell Plc’s assets in Pakistan, possibly marking the Gulf oil giant’s first foray into the South Asian nation, Bloomberg reported on Saturday.

Aramco is studying the Shell assets including Karachi-listed Shell Pakistan Ltd., which has a market value of about $123 million, said the people, who asked not to be identified as the information is private. The Pakistani assets could be valued at around $200 million in a transaction, the people said.

Shell, one of the oldest multinational companies with operations in Pakistan, runs more than 600 fuel stations in the country and has been present there for about 75 years. Shell Pakistan also has a lubricants business in addition to the retail network.

There’s no certainty the deliberations will lead to a transaction, and other suitors could also emerge, the people said. A representative for Shell said the company is seeing strong interest from local and international buyers, declining to comment on specific companies.

“Any sale will be subject to a targeted sales process, the execution of binding documentation and the receipt of applicable regulatory approvals,” the representative said. A spokesperson for Aramco didn’t immediately respond to queries.

Shell said in June it decided to exit Pakistan and planned to sell its 77.4 percent stake in Shell Pakistan as well as its 26 percent ownership in Pak-Arab Pipeline Co., a state-backed cross-country pipeline system. The divestment plan comes as Shell executes a strategy under Chief Executive Officer Wael Sawan to increase returns to shareholders and cut businesses that aren’t making enough money.

Domestic companies Pakistan Refinery Ltd. and Air Link Communication Ltd. also said in July that they are jointly considering to acquire Shell Pakistan.

The pullout is a setback for Pakistan, which is going through economic turmoil as its currency has slumped in the past year.

The nation has seen several multinational companies exit in the last few years. Fuel retailer Puma Energy left in 2021, while trucking startup Trella decided to wind down its business in April.

Saudi Arabia’s Crown Prince Mohammed bin Salman has ordered the kingdom should explore increasing assistance to, and investment in, Pakistan. The Saudi Fund for Development will conduct a study on increasing the deposit in Pakistan’s central bank to $5 billion from $3 billion earlier, state-run Saudi Press Agency reported earlier this year. The fund will also consider a plan to increase investments in Pakistan to $10 billion, according to the same report.

Aramco is in discussions with the government on a $10 billion refinery project, according to a press release in July. Muhammad Ali, the country’s energy minister, confirmed the talks earlier this month.

The Gulf oil giant has been on a buying spree including a 24.6 billion yuan ($3.2 billion) purchase of a 10 percent stake in China’s Rongsheng Petrochemical Co. in March.

Last month, it agreed to buy a stake in MidOcean Energy for $500 million, its first investment in liquefied natural gas. It said this week that it’s in talks to acquire a 10 percent stake in Shandong Yulong Petrochemical Co. in China, which is building a 400,000 barrel-a-day complex.