Saudi Aramco is reportedly considering a potential bid for the assets of Shell Plc in Pakistan, as per individuals familiar with the matter. If materialized, this move would signify the Gulf oil giant’s entrance into the South Asian nation.
The exploration involves a comprehensive study of Shell’s assets, including the Karachi-listed Shell Pakistan Ltd., which presently holds a market value of approximately $123 million, according to undisclosed sources. The potential transaction could value the Pakistani assets at around $200 million, reported Bloomberg quoting the sources familiar with the matter.
Shell, a venerable multinational with a 75-year history in Pakistan, operates over 600 fuel stations and conducts lubricants business in addition to its retail network.
The company announced its decision to exit Pakistan in June and intends to sell its 77.4% stake in Shell Pakistan and its 26% ownership in Pak-Arab Pipeline Co., aligning with its strategy under CEO Wael Sawan to enhance shareholder returns and divest less profitable businesses.
Despite the ongoing deliberations, there is no assurance that a 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.”
Aramco, on the other hand, declined to provide any comments on the matter.
In addition to Aramco, Pakistan Refinery Ltd., and Air Link Communication Ltd. expressed their joint consideration to acquire Shell Pakistan 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.
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.
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 has been actively pursuing investments globally, recently finalizing a $3.2 billion purchase of a 10% stake in China’s Rongsheng Petrochemical Co. and agreeing to a $500 million investment in MidOcean Energy.
Last month, it agreed to buy a stake in MidOcean Energy for $500 million, its first investment in liquefied natural gas. It said this week that it’s 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.
