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Energy giant Shell is reportedly discussing selling its gas station business in Malaysia with Saudi Aramco, marking a significant potential deal worth up to $1 billion. The sale would involve Shell’s extensive network of fuel stations in Malaysia, the second-largest in the country after Petronas.
Importance of the Malaysian Market to Shell:
Shell acknowledges the significance of Malaysia to its operations, emphasizing its commitment to the mobility business in the country. Despite the potential sale, Shell remains focused on its presence and activities in Malaysia, as highlighted in an updated statement.
Negotiations between Shell and Saudi Aramco commenced in late 2023, and discussions progressed towards a potential deal in the coming months. Sources familiar with the case estimate the deal size to range between $844 million and $1.06 billion, reflecting the substantial value of Shell’s gas station network in Malaysia.
Strategic Focus and Business Optimization:
The proposed sale aligns with CEO Wael Sawan’s strategy to streamline Shell’s operations and prioritize its most profitable ventures.
Shell aims to divest approximately 500 gas stations this year and next as part of broader efforts to optimize its portfolio.
The sale of the Malaysia fuel stations complements Shell’s ongoing divestment initiatives, including the Singapore refinery and petrochemical complex.
Relationship with Saudi Aramco and Market Presence:
While Saudi Aramco currently does not operate fuel stations in Malaysia, it holds a significant stake in the Pengerang refinery in Johor through a joint venture with Petronas.
The potential acquisition of Shell’s gas station business would expand Saudi Aramco’s market presence in Malaysia, leveraging its existing partnerships and infrastructure.
Consistency with Refining Strategy:
The sale of Shell’s Malaysia fuel stations is consistent with its broader refining strategy, particularly evidenced by the ongoing divestment of the Bukom Island refinery in Singapore.
This strategic realignment reflects Shell’s focus on optimizing its refining and marketing portfolio to enhance profitability and operational efficiency.
