Shell sells Pakistan stake to Saudi firm

Shell Petroleum Company Limited, a subsidiary of Shell plc, has made a strategic move by agreeing to sell its 77.42% majority interest in Shell Pakistan Limited (SPL) to Wafi Energy LLC. This decision marks a pivotal shift in the energy sector’s landscape, particularly within Pakistan.

SPL is listed on the Pakistan Stock Exchange (PSX:SHEL), and its total business footprint in Pakistan includes more than 600 mobility sites, 10 fuel terminals, a lubricant oil blending plant and a 26% shareholding in Pak-Arab Pipeline Company Limited.

The transaction’s terms, while not public, will have a significant impact on the financial statements and future profitability of SPL.

Overview of the deal

The transaction is a part of Shell’s broader strategy to refine its mobility network. Wafi Energy LLC, a wholly-owned affiliate of Asyad Holding Group, is a prominent player in the Kingdom of Saudi Arabia’s fuel retail sector. The sale, pending regulatory approvals, is anticipated to conclude by the fourth quarter of 2024. Despite the change in majority ownership, the Shell brand’s presence in Pakistan will continue through brand licensing agreements, ensuring that customers retain access to Shell’s premium fuel and lubricant products.

Reasons behind the divestment

Shell’s decision to divest from its Pakistani subsidiary aligns with its global strategy to optimise its portfolio and concentrate on areas where it sees the most value and growth potential. This move also reflects the changing dynamics of the global energy market and Shell’s response to the evolving business environment.

Impact on Shell Pakistan

The ownership change is set to usher in a new chapter for Shell Pakistan. The company’s commitment to delivering safe and reliable operations remains steadfast. However, the transition may bring about changes in business strategies and operational approaches under the new majority stakeholder.

Implications for the energy industry

This divestment could signal a reshaping of the energy industry in Pakistan, potentially influencing market dynamics, competitive landscapes, and strategic partnerships. It also underscores the growing interest of international players in the Pakistani market.

Regulatory aspects and challenges

The completion of this deal is contingent upon the satisfaction of regulatory requirements and approvals. The intricacies of such transactions often involve navigating through a complex regulatory landscape, which could present challenges that need to be meticulously managed.