Shell in talks to sell Malaysian gas station business to Saudi Aramco in $1-billion deal: report

Energy conglomerate Shell is currently negotiating the sale of its extensive gas station network in Malaysia to Saudi Arabia’s state-owned oil company, Saudi Aramco, in a deal that industry insiders estimate could reach $1 billion, Reuters reported.

Strategic divestiture amid global refocusing

Shell, headquartered in London, operates around 950 fuel stations in Malaysia, making it the country’s second-largest network after the state-owned Petronas.

The potential sale, which began discussions in late 2023, is part of Shell’s broader strategy under CEO Wael Sawan to streamline operations and concentrate on the most profitable sectors of its business.

This move includes plans to divest approximately 500 gas stations over the next two years.

Expanding Aramco’s operational footprint

For Saudi Aramco, the acquisition would mark a significant expansion of its retail operations in Southeast Asia.

Although Aramco currently does not own any fuel stations in Malaysia, it holds a 50% stake in the 300,000-barrel per day Pengerang refinery in Johor, which is a joint venture with Petronas.

This refinery both sells fuel domestically and exports it.

Financial specifics and operational synergies

Two sources familiar with the negotiations have cited the potential deal size to be in the range of 4 billion to 5 billion ringgit ($844 million to $1.06 billion).

The sale is seen as aligning with Shell’s strategy to divest from its refinery on Bukom Island in Singapore, which supplies the Malaysian network, suggesting a consolidation of Shell’s assets in favor of more lucrative ventures.

Broader implications and industry context

This proposed transaction comes at a time when major energy companies are reassessing their global assets, focusing on profitability and strategic alignment amidst shifting market dynamics.

Shell’s decision to sell its Malaysian operations follows a similar pattern of divestment seen across the industry as companies adapt to changing economic conditions and market demands.

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