Shell is set to completely divest from Pakistan to “simplify its portfolio”, a Shell spokesperson informed Reuters.
Shell Pakistan Limited (SPL), the Pakistani arm of the multinational oil and gas company, will be sold in its entirety. Shell Petroleum Company owns 77.42% of the shares in SPL, with the rest spread across several individuals. SPL will also sell its shares in other ventures, including a 26% stake in the Pak-Arab Pipeline company.
Shell will include all of its downstream assets in the sale. Among these is its lubricant manufacture business, part of Shell’s world-leading lubricant portfolio. Shell notified the Pakistan Stock Exchange, on which it is listed, that the sale will not affect SPL operations.
Formed in 1898 as Asiatic Petroleum, which was 100% Shell owned, the company dropped its stake down to 24.5% in 1970. This, however, is the first time since its formation that Shell has completely divested from its interests in Pakistan. Shell brought its share ownership up to 76.1% in 2002, where it has roughly stayed ever since.
In its 2022 report, SPL announced a post-tax loss of $878,070 (Rs72m). This is a major downturn compared with the previous year, which saw a profit of $54.4m. The report cites financial concerns relating to the price of the rupee and inflation, alongside geographic issues such as the monsoon season, as key influences behind the loss.
SPL chairperson Zain K Hak said in the 2022 financial report that “the Company continues to face challenges from external factors such as currency devaluation, oil price volatility and economic uncertainty which have strained the Company’s working capital and cash position”.
Hak did reaffirm the board’s commitment to the company, adding: “The Board of Directors along with the management have committed to work towards minimizing the impact of these challenges, capture relevant opportunities and play its due role in developing a sustainable energy future for Pakistan.” Shell has been gradually reducing its commitments in the country for several years. In 2016, it sold its 28.57% stake in Pakistan Refinery, which operated the Karachi I refinery, for $8.2m.
