KARACHI: Saudi Aramco is considering a bid for Shell Plc’s assets in Pakistan, if it decides to go through with it would be the Gulf oil giant’s first entry into the South Asian nation, according to a report of Bloomberg.
People who spoke to the publication on the condition of anonymity said that the Saudi oil giant is studying Shell assets including Karachi-listed Shell Pakistan Ltd which holds a market value of $123 million. The Pakistani assets of the oil and gas company could be valued at around $200 million in a transaction, they added.
Shell has over 600 fuel stations in Pakistan and has been operating in the country for 75 years. Apart from the fuel stations company also has a lubricants business.
However, the people who spoke to the publication clarified that the interest does not mean that it would lead to a buyout and other suitors could also emerge.
A Shell representative said they were getting strong interest from local and international buyers but declined to share any specifics.
“Any sale will be subject to a targeted sales process, the execution of binding documentation and the receipt of applicable regulatory approvals,” the representative said.
Bloomberg reached out to an Aramco spokesperson for comment but they did not respond.
In June of this year, Shell announced it would be exiting the Pakistani market and plans to sell its 77.4% stake in Shell Pakistan as well as its 26% ownership in Pak-Arab Pipeline Co, a state-backed cross-country pipeline system.
The announcement is part of the divestment plan that Shell is executing under a strategy led by Chief Executive Officer Wael Sawan to increase returns for shareholders and cut entities that are not making enough money.
The pullout is a setback for Pakistan, which is going through economic turmoil as its currency has slumped in the past year.
The nation has seen several multinational companies exit in the last few years. Fuel retailer Puma Energy left in 2021, while trucking startup Trella decided to wind down its business in April.
Saudi Arabia’s Crown Prince Mohammed bin Salman has directed officials to explore avenues for increasing assistance to, and investment in, Pakistan. State-run Saudi Press Agency had reported earlier this year that the Saudi Fund for Development plans to carry out a study on increasing the deposit to State Bank of Pakistan from $3 billion to $5 billion. It had also reported that the fund will develop a plan to increase Saudi investments in Pakistan to $10 billion. Aramco is in discussions with the government on a $10 billion refinery project, according to a press release in July. Muhammad Ali, the country’s energy minister, confirmed the talks earlier this month.