Tag: energy industry

  • Shell Pakistan’s domestic operations set for sale to Saudi company 

    Shell Pakistan’s domestic operations set for sale to Saudi company 

    On Wednesday, Shell Pakistan (SHEL.PSX) announced that its parent company’s subsidiary, Shell Petroleum Company, has entered into an agreement with Wafi Energy for the sale of its domestic operations. 

    The international branch of Shell (SHEL.L), known as Shell Petroleum Company, anticipates the completion of this sale by the fourth quarter of 2024, pending regulatory approvals. 

    Back in June, Shell Petroleum Company declared its intention to divest its 77 per cent ownership stake in Pakistan.  

    This decision follows a series of global operational updates by Shell and significant losses incurred by Shell Pakistan (SPL) in 2022.  

    These losses were primarily attributed to fluctuating exchange rates, the devaluation of the Pakistani rupee, delayed receivables, and the backdrop of a financial crisis and economic slowdown in the country. 

    According to Reuters, Wafi Energy, an entirely owned affiliate of Asyad Holding Group, a fuel retailer based in Saudi Arabia, is the acquiring party. 

    Shell Pakistan’s operations encompass more than 600 mobility sites, 10 fuel terminals, a lubricant oil blending plant, and a 26 per cent ownership interest in Pak-Arab Pipeline Company Limited. 

  • Saudi Aramco considers investing in Shell’s $200 million Pakistani assets

    Saudi Aramco considers investing in Shell’s $200 million Pakistani assets

    Saudi Aramco is actively contemplating the possibility of acquiring Shell’s holdings in Pakistan, marking a potential historic foray into the South Asian nation, according to Bloomberg.

    The Saudi oil company is evaluating Shell’s assets in the region, notably Shell Pakistan Ltd., a Karachi-listed entity with a market value of $123 million. The collective value of Shell’s Pakistani assets is estimated to hover around $200 million, according to insiders.

    Shell boasts a rich legacy of over seven decades in Pakistan, with a network of more than 600 fuel stations. The company has not only been a prominent fuel supplier but has also been engaged in the lubricant business.

    It’s crucial to note that this expression of interest from Saudi Aramco doesn’t guarantee an outright acquisition. Other potential suitors might emerge on the horizon.

    Responding to inquiries, a Shell representative acknowledged strong interest from both local and international buyers but refrained from divulging specific details. The representative emphasised that any sale would follow a structured sales process, including the execution of binding agreements and the requisite regulatory approvals.

    In a significant announcement made in June, Shell disclosed its intention to exit the Pakistani market, with plans to divest its 77.4 per cent stake in Shell Pakistan and its 26 per cent ownership in Pak-Arab Pipeline Co., a state-supported cross-country pipeline network. This strategic move aligns with Shell’s broader divestment strategy, led by CEO Wael Sawan, aimed at enhancing shareholder returns by shedding underperforming assets.

    Shell’s withdrawal represents a challenge for Pakistan, which is grappling with economic instability, exemplified by a depreciating currency over the past year. Pakistan has witnessed the departure of several multinational corporations in recent years, including fuel retailer Puma Energy in 2021 and the shutdown of trucking startup Trella in April.

    Meanwhile, Saudi Arabia, under the guidance of Crown Prince Mohammed bin Salman, has expressed a commitment to bolster its involvement and investments in Pakistan. The Saudi Fund for Development is exploring the possibility of increasing its deposit with the State Bank of Pakistan from $3 billion to $5 billion, as well as a plan to elevate Saudi investments in Pakistan to $10 billion.

    Furthermore, Aramco has entered into discussions with the Pakistani government regarding a substantial $10 billion refinery project, as confirmed by the country’s energy minister, Muhammad Ali, earlier this month. These developments reflect the growing engagement and economic ties between Saudi Arabia and Pakistan.

  • Power company in Punjab wants to set power price at record-breaking high of Rs77.3 per unit

    Power company in Punjab wants to set power price at record-breaking high of Rs77.3 per unit

    In a noteworthy development that has captured significant attention and ignited considerable debate, the Kot Addu Power Company (KAPCO) has formally submitted an application to the National Electric Power Regulatory Authority (NEPRA) for the endorsement of what could potentially become the nation’s most costly electricity generation tariff. 

    This significant step has unfolded against the backdrop of ongoing deliberations concerning the escalating expenses associated with electricity production within Pakistan. 

    The Kot Addu Power Company has put forth a bold proposition, aiming to establish the electricity tariff at an unprecedented Rs77.31 per unit, attributing the primary rationale for this request to substantial hikes in production costs. 

    Notably, the present initial tariff offered by the independent power producer (IPP) company stands at a modest twenty-eight rupees per unit, underscoring the magnitude of the escalation should their proposal garner approval. 

    Adding a layer of complexity to this unfolding narrative, IPP Kot Addu Power, the entity responsible for electricity generation, has been granted a sixteen-month extension during the tenure of the Pakistan Tehreek-e-Insaf (PTI) administration.  

    However, this extension has not been without its share of controversy, with the Senate Power Committee recently deeming it unlawful, further intensifying the discourse surrounding this matter. 

  • Shell Pakistan’s parent company to exit ownership, announces sale of stake

    Shell Pakistan’s parent company to exit ownership, announces sale of stake

    Shell Pakistan Limited (SPL) announced on Wednesday that its parent company, Shell Petroleum Company Limited (SPCo), has communicated its intention to divest its ownership stake in SPL. The notification was conveyed by SPCo to the Board of Directors of Shell Pakistan Limited during a meeting held on June 14, 2023. The announcement was promptly disseminated to the Pakistan Stock Exchange (PSX) by Shell Pakistan.

    The potential sale of shares is contingent upon a targeted sales process, the completion of binding documentation, and obtaining the requisite regulatory approvals. It should be noted that SPL operates as a subsidiary of Shell Petroleum Company Limited, United Kingdom, which is itself a subsidiary of Royal Dutch Shell Plc—a globally renowned energy and petrochemical conglomerate.

    Shell Pakistan Limited engages in the marketing of petroleum products, compressed natural gas, and a diverse range of lubricating oils. While this development signifies a change in ownership, Shell Pakistan has emphasised that its ongoing business operations will remain unaffected and continue as usual. The company remains fully committed to ensuring the provision of safe and reliable services to its valued customers and partners.

    In the previous month, Shell Pakistan Limited released its financial results for the first quarter of 2023, which were significantly impacted by the prevailing economic crisis in the country. The company reported a substantial loss of Rs4.6 billion, in contrast to a profit after tax of Rs2 billion in the corresponding period last year. This downturn can be attributed to the unprecedented devaluation of the Rupee, escalating inflation, and broader macroeconomic uncertainties.