In a potential groundbreaking move, Saudi Aramco is reportedly exploring the possibility of bidding for Shell Plc’s assets in Pakistan. If this materializes, it would mark the entrance of the Gulf oil giant into the South Asian nation. This article delves into the details of this significant development, shedding light on the implications for both companies and the Pakistani market.
The exploration of this potential transaction involves a comprehensive study of Shell’s assets, which includes the Karachi-listed Shell Pakistan Ltd. According to undisclosed sources, the market value of Shell Pakistan Ltd. presently stands at approximately $123 million. The potential transaction could value the Pakistani assets at around $200 million, reported Bloomberg, citing sources familiar with the matter.Shell’s Presence in Pakistan
Shell, a venerable multinational corporation with a 75-year history in Pakistan, operates over 600 fuel stations and conducts lubricants business in addition to its retail network. However, the company announced its decision to exit Pakistan in June. This move is in line with Shell’s strategy under CEO Wael Sawan to enhance shareholder returns and divest less profitable businesses. As part of this decision, Shell intends to sell its 77.4% stake in Shell Pakistan and its 26% ownership in Pak-Arab Pipeline Co.
Despite the ongoing deliberations, it’s important to note that there is no assurance that this transaction will occur. Other potential buyers may also emerge, according to the sources. A spokesperson for Shell remarked that the company has garnered strong interest from both local and international buyers, refraining from commenting on specific companies involved.
The spokesperson added, “Any sale will be subject to a targeted sales process, the execution of binding documentation, and the receipt of applicable regulatory approvals.” On the other hand, Aramco declined to provide any comments on the matter.
Other Interested Parties
In addition to Aramco’s interest, Pakistan Refinery Ltd. and Air Link Communication Ltd. have also expressed their joint consideration to acquire Shell Pakistan back in July. The potential departure of Shell from the Pakistani market is perceived as a setback for the country, which has witnessed economic challenges, including currency devaluation over the past year.
Saudi Arabia’s Investment in Pakistan
Furthermore, Aramco’s interest in Pakistani ventures aligns with Saudi Arabia’s Crown Prince Mohammed bin Salman’s directive to explore increased assistance and investment in Pakistan. It’s noteworthy that the Saudi Fund for Development is reportedly conducting a study on enhancing the deposit in Pakistan’s central bank, considering an increase to $5 billion from the previous $3 billion.
Aramco’s Global Investments
Aramco has been actively pursuing investments globally. Recently, it finalized a $3.2 billion purchase of a 10% stake in China’s Rongsheng Petrochemical Co. and agreed to a $500 million investment in MidOcean Energy. Last month, it also agreed to buy a stake in MidOcean Energy for $500 million, marking its first investment in liquefied natural gas. Additionally, Aramco is currently in talks to acquire a 10% stake in Shandong Yulong Petrochemical Co. in China, which is reportedly building a 400,000 barrel-a-day complex.
The potential bid by Saudi Aramco for Shell’s assets in Pakistan has generated significant interest in the energy and investment sectors. While uncertainties persist, the outcome of this move could reshape the dynamics of the Pakistani market and establish a new chapter in the Gulf oil giant’s global investments.