Shell Denies Press Reports of Exit from Africa Operations
Thomas Pearmain
267 words
14 January 2010
IHS Global Insight Daily Analysis
WDAN
English
Copyright 2010, IHS Global Insight Limited. All Rights Reserved.
Anglo-Dutch supermajor Shell has denied press reports that it is planning on exiting the fuel marketing business in 24 countries in which it operates through the subsidiary Shell Africa. The speculation appears to have started in the Kenyan newspaper Daily Nation, which reported local dealers as saying Shell intends to sell its refinery, storage and retail businesses in Africa. Last year Shell divested of its stake in Kenya’s Mombasa refinery as it did not want to invest the necessary funds to modernise and upgrade the facility. Shell communications manager for East Africa Victoria Kaigai told Business Daily "Like any competitive business, Shell actively manages its global portfolio and is always seeking opportunities to improve profitability.
We continuously review our global downstream portfolio in line with our more upstream, profitable approach to capital allocation."Significance: Shell is not about to exit Africa and the Kenyan press reports are sensationalist, speculative, and unhelpful. Shell is certain to continue investing in its upstream operations in Africa even if it does shuffle its portfolio of producing assets. Nonetheless, as it has already sold its equity in the Mombasa refinery Shell could continue to divest various downstream assets in Sub-Saharan Africa, especially fuel marketing operations, due to an increase in competition leading to depressed profit margins. Many Western oil majors have pulled out of downstream operations in Africa in recent years: French supermajor Total sold its stake in Zambia’s Indeni refinery late last year, while Chevron divested itself of its east and west African fuel marketing businesses.