Shell set to exit local oil market

BY JOHN NJIRAINI

Oil marketer Kenya Shell is finally set to exit the local oil market after finding a buyer for its operation and assets.

After close to a year of intensive negotiations, Royal Dutch Shell Plc has reached an agreement with Vitol Group and private equity firm Helios Investments to dispose off its downstream operation in 19 African nations.

In July last year, Vitol announced that it had entered into exclusive negotiations with Shell Africa for the potential acquisition of Shell’s downstream businesses. Under the terms of the exclusivity agreement, Shell was barred from holding discussions with any other interested party other than Vitol and Helios.

"In addition, under the scope of a potential deal between the three companies, it is envisaged that Shell would retain a shareholding and the Shell brand would remain across all marketing businesses, including retail and lubricants," said Vitol then.

Now, it has emerged the three companies have reached a deal that will see Shell quit the downstream business in 19 African countries, including Kenya, and concentrate on exploration and production.

On Thursday, Kenya Shell had planned to announce the acquisition, but corporate communications manager Victoria Kaigai said a planned press conference had been postponed till further notice.

The finalisation of the deal will see Vitol and Helios take over the assets of Shell Africa that includes 1,300 retail sites, retail sales of around 3,500,000 cubic metres, and 1,200,000 cubic metres of terminal storage.

The two firms are also expected to absorb around 2,500 employees currently employed in the various businesses in the 19 countries.

With the exit of the local market, Kenya Shell now joins Esso, Agip, Mobil, British Petroleum (BP) and Caltex that have quit Kenya largely due to challenges revolving around lack of a strong regulatory framework to govern the industry, lack of adequate infrastructure to help movement of products and lack of a level playing field in the use of state-owned facilities.

ENDS....