Shell Petroleum Company Decides To End Business In Pakistan
Operating in Pakistan has been difficult for many businesses including multinational corporations. Today, Shell Petroleum Company has decided to sell most of its shares (77%).
On June 14, 2023, Shell Pakistan (SPL), the parent company of Shell Petroleum Company, announced that it would exit Pakistan by selling 77% of its shares in the company. This decision was mainly driven by the financial losses of Shell Pakistan 2022 due to exchange rate fluctuations, appreciation of the Pakistani rupee and unpaid debts. In addition, Pakistan is currently struggling with financial crisis and economic slowness.
Also Read: Petrol Price in Pakistan Further Decreased – June 2023
Shell Petroleum Company Financial Report 2022 – 2023
Shell’s 2022-2023 financial report tells the story. The company posted a loss of Rs4.6 million in Q3 2022 (July-September). Trouble continued, and in the first quarter of 2023 (January-March), the company suffered a loss of Rs4.7 million, causing its stock to drop to Rs22.25. These statistics are in line with the results of the Pakistan Economic Survey 2022-23, which revealed a 21.9% decrease in the sale of petroleum products between July 2022 and March 2023.
Can Other Petroleum Companies Leave As Well?
The potential of other oil companies to leave is not because of specific problems for those companies, but because of the difficult business environment. With higher oil prices, a significant decrease in car sales, lower energy production and slower economic growth, consumption of petroleum products will continue to decline. As a result, other oil companies may also decide to exit the market.
Shell Pakistan Limited is basically a Pakistani oil and gas company which is a subsidiary of the Shell plc and has been in South Asia more than 100 years. Shell’s main flagship business in Pakistan is the downstream retail marketing company, Shell Pakistan Limited, which has interests in downstream businesses including retail, lubricants and aviation.
Shell Petroleum Pakistan (SPL) has almost 850 retail petrol stations in 330 cities all over Pakistan, having approx. 20% market share and considered as the largest foreign investor in Pakistan.
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