Shell had been incurring financial losses for some time, but we were unaware of it.
Operating in Pakistan has been challenging for numerous businesses, including multinational corporations. Today, Shell has made the decision to sell the majority of its shares (77%).
On June 14, 2023, Shell Pakistan (SPL) announced that its parent company, Shell Petroleum Company, would be leaving Pakistan by selling its 77% ownership in the company. This decision was prompted by Shell Pakistan’s financial losses in 2022, mainly due to fluctuations in exchange rates, the devaluation of the Pakistani rupee, and unpaid debts. Additionally, Pakistan is currently grappling with a financial crisis and a slowing economy.
Shell’s Financial Report 2022 – 2023
Shell’s financial report for 2022-2023 tells the story. The company started facing difficulties in Q3 (July-September) of 2022, when it incurred a loss of Rs.4.6 million. The troubles persisted, and in Q1 (January-March) of 2023, the company suffered a loss of Rs.4.7 million, leading to a decrease in its share value by Rs.22.25. These statistics align with the findings of the latest Pakistan Economic Survey 2022-23, which revealed a 21.9% decline in the sale of petroleum products between July 2022 and March 2023.
Can Other Petroleum Companies Leave As Well?
The possibility of other petroleum companies leaving arises not from issues specific to those companies but rather from the challenging operating environment. As long as there are high oil prices, a significant decrease in automobile sales, low power generation, and sluggish economic growth, the overall consumption of petroleum products will continue to decline. Consequently, other petroleum companies may also decide to exit the market.
Let us know what you make of this news. And for the latest prices of petroleum products in Pakistan, read our blog.
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