Shell is Exiting Operations in Pakistan after 75Y

Source: 6/15/2023, Location: Asia

• Shell Petroleum to sell 77% holding in listed Shell Pakistan
• Pakistan operations incurring losses
• Global assets under review

Its UK subsidiary Shell Petroleum Co Ltd plans to sell holding in Shell Pakistan Ltd (SPL), noting “strong interest from international buyers”, SPL said in a 14 June statement posted on its website.

No timeline for the sale was provided.

Shell Petroleum owns 77% of Pakistan-listed SPL, which markets petroleum products and compressed natural gas, as well as blends and markets various kinds of lubricating oils.

“This announcement does not impact SPL’s current business operations, which continue,” SPL stated in a separate disclosure to the Pakistan Stock Exchange.

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

In its 75 years in Pakistan, Shell has a substantial retail footprint and a strong lubricants business, it said.

But SPL has been incurring losses since last year as a result of the slumping Pakistani rupee (PRs), rising inflation and macroeconomic uncertainty.

It posted a first-quarter 2023 loss after tax of PR4.76bn ($17m), a reversal of the PR2.08bn profit after tax generated in the same period last year.

For the full-year 2022, the company swung to a loss after tax of PRs72m from a profit after tax of PRs4.47bn in the previous year.

As of 05:44 GMT, SPL shares were up 7.5% at PRs96.86, according to data from Pakistan’s bourse.

At Shell’s Capital Markets Day in New York on 14 June, its chief financial officer Sinead Gorman said that Shell will take a “ruthless approach to capital allocation with a singular focus on creating long-term value”.

There will be a renewed commitment to oil and gas, and liquefied natural gas (LNG) where returns are expected to be the highest, while chemicals will come under greater scrutiny.

Shell will conduct a strategic review of its energy and petrochemical assets in Singapore, while its European plants will be evaluated “unit by unit”.

Singapore is Shell’s largest petrochemical production and export centre in the Asia Pacific. Its energy and chemicals park on Pulau Bukom can produce 1.15m tonnes/year of ethylene and other downstream products.

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