Saudi Aramco will unveil a potential bid for Shell's assets in Pakistan, according to people familiar with the matter, which could mark the Gulf oil giant's first foray into the South Asian country.
Aramco is considering buying Shell's assets in the Asian country, including Karachi-listed Shell Pakistan Limited, which has a market value of about $123 million, said the people, who asked to remain anonymous because the information is private. Pakistani assets in the deal could be worth about $200 million, the people said.
Shell, one of the oldest multinational companies operating in Pakistan, operates more than 600 gas stations in the country and has been there for about 75 years. Shell Pakistan also has a lubricants business in addition to a retail network.
There is no certainty the deliberations will lead to a deal, and other bidders could emerge, the people said. A Shell representative said that the company is witnessing strong interest from local and international buyers, declining to comment on specific companies.
A Shell representative added: Any targeted sale will be subject to applicable regulatory rules and approvals. An Aramco spokesman did not immediately respond to inquiries.
Shell said in June that it had decided to exit Pakistan and planned to sell its 77.4% stake in Shell Pakistan as well as its 26% ownership in the Pakistan Arab Pipeline Company, a state-backed pipeline network. The divestment plan comes as the global company implements a strategy under the leadership of CEO Wael Sawan to increase returns to shareholders and shrink companies that do not make enough money.
Local companies Pakistan Refinery Limited and Airlink Communications Limited said in July that they were jointly considering an acquisition of Shell Pakistan.
Economic disturbances
Shell's withdrawal represents a setback for Pakistan, which has been suffering from economic turmoil with the decline of its currency in the past year. The country has witnessed the exit of many multinational companies in the past few years. Fuel retailer Puma Energy left in 2021, while trucking startup Trella decided to wind down its business in April.
Saudi Crown Prince Mohammed bin Salman directed the need to explore increased aid and investment in Pakistan. The state-run Saudi Press Agency reported earlier this year that the Saudi Fund for Development would conduct a study on increasing deposits at the Central Bank of Pakistan to $5 billion from $3 billion earlier. The fund will also study a plan to increase investments in Pakistan to $10 billion, according to the same report.
Aramco is in discussions with the government regarding a $10 billion refinery project, according to a press release issued in July. Mohamed Ali, the country's energy minister, confirmed those talks earlier this month.
The Gulf oil giant has gone on a buying spree, including buying a 24.6 billion yuan ($3.2 billion) 10% stake in China's Rongxing Petrochemical Company in March. Last month, Aramco agreed to buy a stake in Mid Ocean Energy for $500 million, its first investment in liquefied natural gas. It said this week it was in talks to acquire a 10% stake in Shandong Yulong Petrochemical Company in China, which is building a 400,000 bpd complex.
