Shell plans to sell a 77pc stake in its Shell Pakistan's lubricant business, marking its exit from the country after 75 years of operations.
Shell plans to sell its stake to international buyers, Shell Pakistan said in an exchange filing on 14 June. The 15pc stake in Shell Pakistan is held by the public.
The decision came as it suffered losses of around 4.76bn Pakistani rupees ($16.84mn), against a profit of Rs2.07bn in 2021, because of a devaluation of the local currency, rising inflation, and macroeconomic uncertainty.
"Continued economic challenges resulted in slowdown in economic activity, decrease in demand and risks to supply security for the company," the firm said on 4 May. "Finances and profitability of the company also continued to be impacted."
With the stake sale, Shell Pakistan will lose its 26pc ownership of Pak-Arab Pipeline, putting Shell's long-term investment in Pakistan under pressure. The pipeline helps in transporting 5mn t/yr of refined high-speed diesel from Pakistan's Karachi ports to the country's Shikarpur and Mehmood Kot districts.
In south Asia, Shell has a presence in India, in downstream activities producing engine oils and lubricants. It has an LNG import and re-gasification terminal in Gujarat state,with a capacity of 5mn t/yr.
Shell is also present in Bangladesh, distributing lubricants under its partnership with Ranks Petroleum.
The decision to sell the Pakistani business comes despite the global conglomerate's plans to increase investment in its upstream and integrated gas operations.
Shell aims to bring on stream more than 500,000 b/d of oil equivalent of production by 2025, and its integrated gas volumes are expected to grow by 25-30pc over 2022-30 to above 35mn t/yr, with some 11mn t/yr of LNG capacity additions. The company also aims to maintain its liquids production at around 1.4mn b/d through to the end of the decade.
