Shell wants out of Botswana

BRIAN BENZA
Staff Writer | Wednesday April 7, 2010 00:00

 

This news comes hardly a month after another oil company, BP, announced plans to pull out. In a statement on its website, Shell says it is shifting its focus to exploration and production of oil while simultaneously cutting back further on refining and marketing.

'Shell Oil Products Africa (Shell) announces it is reviewing ownership options for its downstream businesses in 21 countries in Africa,' says the statement posted last week.

'While a number of options are being considered, the preferred outcome is the sale of most businesses in scope as going concerns.' Shell is reviewing 15 percent of its refining capacity and is selling other retail assets in Latin America as well, putting a total of 35 percent of its current retail markets under review.

The other African countries to be affected are Morocco, Algeria, Tunisia, Egypt, and Cote d'Ivoire, Burkina Faso, Ghana, Togo, Senegal, Mali, Guinea, Cape Verde, Kenya, Uganda, Tanzania, Namibia, Madagascar, Mauritius and La Reunion.

In a telephone interview with Mmegi Shell Oil Botswana's Managing Director Boitumelo Sekwababe says the  company is trying to negotiate  with possible buyers at a group  and not country level .'We are negotiating with potential buyers that will take over the operations in all the countries we are pulling out. It will not be a country by country disposal,' he said, adding that no timeframes have been set yet for the final pullout.Sekwababe also allayed fears of possible job losses saying that the operations will be sold as a going concern.

The company also agreed last week to sell its New Zealand fuel-retailing  assets to Infratil Ltd. and the New Zealand government pension fund for NZ$695 million ($489.4 million) as part of a global focus on production and exploration. 'Early indications suggest there are a number of potential buyers interested in acquiring the businesses as going concerns,' Xavier le Mintier, executive vice-president of Shell Oil Products Africa, said in the statement.  'We will now enter into a round of negotiations, with a view to securing the optimum outcome for our shareholders, customers and staff.'

Chief Executive Officer, Peter Voser, has targeted $1 billion in cost savings this year and will cut 2, 000 more jobs by the end of next year to weather the economic slowdown that has caused fuel inventories to swell in the US and Europe.Shell is also reviewing its liquefied petroleum gas business in South Africa, although all other downstream operations in that country are excluded from the review.

The company's exploration and production businesses, liquefied natural gas interests and most international trading activities in Africa are also out of scope.

Adding his comments, Mark Williams, Royal Dutch Shell's Downstream Director, said: 'The review is consistent with our strategy to concentrate our global downstream footprint and follows a number of similar reviews and divestments in other parts of the world.

'Shell's programme of downstream asset sales will continue through planned exits from 15 percent of our worldwide refining capacity and 35 percent of our current retail markets, which equates to about five percent of Shell-branded retail sites around the world,' he said. Shell Oil Botswana has 45 retail sites across the country, competing with BP, Engen, Caltex and Total. BP, which is the second largest oil company in Botswana, announced last month that it would be pulling out of five southern African countries, namely, Botswana, Zambia, Malawi, Tanzania and Namibia also as a result of a strategic review.

BSE-listed Engen, Botswana's third biggest oil company, has said it was looking at taking advantage of the opportunity presented by BP's pullout while Kenya's KenolKobil has also said it was interested in BP Plc's marketing businesses in the five African nations.