ISLAMABAD: Saudi Aramco is contemplating making an offer for Shell Plc’s assets in Pakistan. If they proceed with this bid, it would mark the Gulf oil giant’s inaugural entry into the South Asian nation.
According to anonymous sources, the Saudi oil giant is currently assessing Shell’s assets, which include Karachi-listed Shell Pakistan Ltd, with a market value of $123 million. The potential value of the oil and gas company’s assets in Pakistan could reach approximately $200 million in a transaction.
Shell boasts a significant presence in Pakistan, operating for 75 years with over 600 fuel stations and a lubricants business. It’s worth noting that this interest does not guarantee an acquisition, and other potential buyers may emerge.
A Shell representative acknowledged substantial interest from local and international buyers but refrained from disclosing specific details. The representative emphasized that any sale would be contingent on a targeted sales process, the execution of binding documentation, and the receipt of requisite regulatory approvals.
Bloomberg reached out to an Aramco spokesperson, but they did not respond.
Shell Exit and Saudi Investment in Pakistan
In June of this year, Shell declared its intention to exit the Pakistani market, including the sale of its 77.4% stake in Shell Pakistan and its 26% ownership in the state-backed cross-country pipeline system, Pak-Arab Pipeline Co. This decision aligns with Shell’s divestment strategy, led by Chief Executive Officer Wael Sawan, aiming to enhance returns for shareholders and shed entities that are not meeting profitability targets.
This withdrawal represents a setback for Pakistan, which is grappling with economic challenges, including a depreciating currency. Several multinational companies have exited the Pakistani market in recent years, with fuel retailer Puma Energy departing in 2021 and trucking startup Trella winding down its business in April.
Saudi Arabia’s Crown Prince, Mohammed bin Salman, has directed officials to explore avenues for increased assistance and investment in Pakistan. The state-run Saudi Press Agency previously reported that the Saudi Fund for Development is considering raising its deposit in the State Bank of Pakistan from $3 billion to $5 billion. Also, Reports suggested that the fund intends to formulate a plan to increase Saudi investments in Pakistan to $10 billion.
Furthermore, Aramco is engaged in discussions with the Pakistani government regarding a $10 billion refinery project, as indicated in a press release from July. Muhammad Ali, the country’s energy minister, confirmed these talks earlier this month.
