NAIROBI, Kenya Apr 1- Shell Oil Products Africa (Shell) has announced that it is looking for a strategic buyer as it looks to exit the African market.
This comes after a month of speculation on whether the multinational was looking to downstream its African operation.
In a statement, Shell said it is reviewing ownership options for its downstream businesses in 21 countries in Africa.
While a number of options were being considered, the preferred outcome is the sale of most businesses in scope as going concerns, subject to successful negotiations, and any necessary regulatory and final company approvals.
The transition is set to last 12 months with the deal set to be closed in six months time.
The scope of the review is Shell’s downstream businesses (Retail, Commercial Fuels, liquefied petroleum gas (LPG), Bitumen, Aviation and Marine) in 20 African countries.
Shell’s fuels, lubricants and refining activities in South Africa are not affected by the review. Shell’s lubricants business in Egypt is out of scope.
The company’s exploration and production businesses, liquefied natural gas interests and most international trading activities in Africa are also out of scope.
An option to appoint third-party distributors for Shell-branded lubricants in Morocco, Tunisia, Algeria and Ghana is included in the review.
Shell Oil Products Africa Executive Vice President Xavier le Mintier said the decision was part of a drive to refocus its global downstream footprint into fewer but larger markets.
He said that the businesses under review in Africa were profitable and in strong positions in their respective markets offering ample scope for growth to owners willing to invest in them.
“Early indications suggest there are a number of potential buyers interested in acquiring the businesses as going concerns and we will now enter into a round of negotiations, with a view to securing the optimum outcome for our shareholders, customers and staff,” Mr le Mintier said.
Royal Dutch Shell’s Downstream Director Mark Williams said the review was consistent with Shell’s strategy to concentrate its global downstream footprint.
“Shell’s program of downstream asset sales will continue through planned exits from 15 percent of our world-wide refining capacity and 35 percent of our current retail markets, which equates to about 5 percent of Shell-branded retail sites around the world,” Mr Williams said.
In 2008, Royal Dutch Shell moved away from 15 African countries, although it holds on to its most lucrative activities, exploration and production.
Shell’s exit will leave Total as the single largest global brand in the local retail petroleum business following its acquisition of Chevron (Caltex). The recent past has seen Mobil sell its stake to Oil Libya.
The exit of major multinationals could be linked to the in 2004, which opened the door for local oil marketers to thrive.