Shell sells LPG business in Philippines to Itochu and local firm

Pilipinas Shell Petroleum Corp. has announced that it has sold its liquefied petroleum gas (LPG) business in the Philippines to Japan’s Itochu Corp. and local firm Isla Petroleum and Energy, at a deal valued at ¥10 billion (US$130.61 million). Pilipinas Shell’s LPG business accounts for about 20% of the country’s LPG market. Isla Petroleum & Energy is controlled by the Delgado family, led by Jose Ricardo Delgado. The company sold a portion of its shareholding to Itochu Petroleum Co. (Singapore) Pte Ltd. last year. According to Shell, the agreement is the outcome of a review of Shell’s LPG business in the Philippines and is consistent with company strategy to concentrate its global downstream footprint in a smaller number of larger markets. Itochu said that the deal was in line with its company strategy of expanding its global energy trading business. The deal might be completed by December. Shell’s decision to sell its LPG distribution business marks a further downsizing of its downstream operations in the Philippines, following the selling off of retail, commercial and distribution assets in Guam, Saipan and Palau in 2009. These assets were also sold to Isla Petroleum and Energy, which already has a licensing agreement to sell Shell-branded oil products in the Philippines. The pre-existing relationship between Shell and Isla Petroleum likely influenced the decision to sell the LPG business to the Filipino company. Shell is the second major oil company to sell off its LPG business in the country, after Chevron Philippines Inc.’s decision to divest its LPG assets to Petron Corp. in 2007. (September 28, 2011)
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