Shell Pakistan Announces Parent Company’s Exit, Share Sale to Occur
Karachi, June 14 (Reuters) – Shell Pakistan (SHEL.PSX) disclosed on Wednesday its plans for its parent company, Shell Petroleum Company, to exit the Pakistani market by selling its majority stake of 77% in the local business.
This decision comes in response to the financial challenges faced by Shell Pakistan (SPL) in 2022, including losses attributed to fluctuating exchange rates, devaluation of the Pakistani rupee, and overdue receivables. Additionally, the country’s financial crisis and economic slowdown further influenced this strategic move.
“To streamline and enhance our portfolio, Shell Petroleum Company Ltd… has initiated the process of divesting its 77.42% shareholding in Shell Pakistan Ltd,” stated a spokesperson for Shell Pakistan in an email to Reuters.
This divestment encompasses “all of SPL’s Downstream businesses and SPL’s 26% ownership of Pak-Arab Pipeline Company Ltd (PAPCO),” the spokesperson added. The Downstream businesses include Mobility and Lubricants.
SPL is currently listed on the Pakistan Stock Exchange, and the company clarified in a notification to the exchange that this announcement will have no immediate impact on SPL’s ongoing business operations, which will continue as usual.
Shell's Exit from Pakistan Unit
Shell Announces Intention to Sell Stake, Focuses on Divestment Process
In a recent notice, it was revealed that Shell Petroleum Company has informed its board of directors about its plans to sell its stake. The decision was made during a meeting held on June 14, with Shell emphasizing its commitment to transparency throughout the process.
The spokesperson emphasized that these choices were made after careful consideration, with Shell’s main objective now being the execution of a safe and seamless divestment while ensuring the continuity of secure and reliable operations.
During the course of 2022, Shell successfully generated $2.1 billion from divestments, a decrease compared to the $15.1 billion achieved in 2021, which included the divestment of Permian assets. As part of its ongoing evaluation, Shell also announced a strategic review of its energy and chemicals assets located in Bukom and Jurong Island, Singapore.
Wael Sawan, the new CEO, unveiled plans to enhance shareholder value through increased dividends and share buybacks, all while maintaining steady oil output until 2030.
Reporting by Ariba Shahid; Writing by Sakshi Dayal and Gibran Peshimam; Editing by David Evans, Jan Harvey, Kirsten Donovan