Shell to sell Pakistan unit to Saudi firm

KARACHI: Shell Pakistan on Wednesday said its parent company’s unit, Shell Petroleum Company, has signed a deal with Wafi Energy to sell the domestic operations.

Shell Petroleum Company, the international arm of Shell, said the sale is expected to complete by the fourth quarter of 2024, subject to regulatory approvals.

In June, Shell Petroleum Company said it would exit Pakistan with the sale of its 77% shareholding.

The move comes after Shell made several announcements about its global operations and after Shell Pakistan (SPL) suffered losses in 2022 due to exchange rates, the devaluation of the Pakistani rupee, and overdue receivables, and as the country faces a financial crisis and economic slowdown.

“… the Board of Directors of Shell Pakistan Limited (SPL), in a meeting of its board held on June 14, 2023, have been notified by SPCo of its intent to sell its shareholding in SPL,” SPL said in a notice to the Pakistan Stock Exchange.

Shell Pakistan Limited (SPL), however, said that the development would have no impact on its current business operations, which will continue.

Wafi Energy is a wholly-owned affiliate of Asyad Holding Group, a fuel retailer in Saudi Arabia.

Shell Pakistan’s operations include more than 600 mobility sites, 10 fuel terminals, a lubricant oil blending plant and a 26% shareholding in Pak-Arab Pipeline Company Limited.

In May, Shell Pakistan Limited announced its financial performance for the first quarter of 2023, which was severely impacted by the ongoing economic crisis in the country.

The earnings of the company turned crimson in 1QFY23 versus a similar period last year – from a profit after tax of Rs2 billion, the company posted a loss of Rs4.6 billion.

The loss came on the back of an unprecedented devaluation of the Rupee, rising inflation and macroeconomic uncertainty.