Shell Petroleum Company Limited (SPCo) intends to sell its stake in Shell Pakistan Limited (PSX: SHEL), said a stock filing at the Pakistan Stock Exchange on Wednesday.
According to the filing, the Board of Directors of SPL, in a meeting held on June 14, 2023, has been notified by the SPCo of its intent to sell its shareholding (77% of local operations) in SPL.
“Any sale will be subject to a targeted sales process, the execution of binding documentation, and receipt of applicable regulatory approvals,” the filing added.
“This announcement does not impact SPL’s current business operations, which continue. SPL remains committed to continuing to deliver safe and reliable operations for our customers and partners,” the filing further stated.
Shell Spokesperson told ProPakistani,
Shell is seeing strong interest from international buyers. SPL remains committed to delivering safe, reliable operations.
“Shell Petroleum Company Limited, a subsidiary of Shell plc (Shell), has announced its intention to sell its holding in Shell Pakistan Limited (SPL), simplifying Shell’s portfolio. Shell Pakistan has been in the country for 75 years and has a substantial retail footprint and a strong lubricants business. Any sale will be subject to a targeted sales process, the execution of binding documentation and the receipt of applicable regulatory approvals,” the spokesperson added.
Shell started considering exiting its home energy retail businesses in the United Kingdom, the Netherlands and Germany in January due to difficult market conditions caused by EU authorities who have been seeking to protect customers from rising energy bills. This most likely pushed Shell to cut costs in other stations, with Pakistan being one of the many reported channels that the company decided to quit.
The British firm now intends to keep producing oil until 2030 while increasing its natural gas business in order to maintain its position as the world’s top liquefied natural gas (LNG) player. Meanwhile, it may scale back operations in more countries to stay strategically competitive in the sector.
Focus on Value With Less Emissions
Enhanced focus on performance, discipline and simplification
Shareholder distributions increased to 30-40% of cash flow from operations (CFFO) through the cycle
15% increase in dividend per share effective Q2 2023*
Share buybacks of at least $5 billion for the second half of 2023*
Capital spending reduced to $22-25 billion per year for 2024 and 2025
Annual operating cost structurally reduced by $2-3 billion by end 2025
Reiterated commitment to climate targets, including net-zero emissions by 2050
Business Editor at ProPakistani, Rao Jehangir Nasir, said “This has happened in the past as well, where due to unfavorable economic circumstances multi-national businesses have opted to either scale back their operations or wind up operations altogether. Shell has been the latest MNC to announce the winding up of operations in the country. The company has been posting losses for the last three quarters”.
“It has become challenging of late for the company to operate financially due to prevalent economic issues such as the constant devaluation of the rupee, untamed inflation, excessive taxation, and overall unstable business environment,” he added.
SPL posted heavy losses for the first quarter of 2023 last month, badly damaged by the country’s protracted economic crisis. The company’s earnings turned crimson in 1QFY23 compared to a similar time last year – from a profit after tax of Rs. 2 billion to a loss of Rs. 4.6 billion.
The loss was caused by an unprecedented depreciation of the rupee and macroeconomic uncertainty.
At the time of filing, SHEL’s scrip at the bourse was Rs. 89.17, up 7.5 percent or Rs. 6.22 with a turnover of 4,287,500 shares on Wednesday.
Source: Pro Pakistani