Royal Dutch Shell (LON: SHEL), the global oil giant, is currently in discussions with Saudi oil major Aramco to sell its gas station operations in Malaysia. While the deliberations about the deal are ongoing, sources familiar with the matter indicate that the transaction could be valued at around $1 billion.
Shell shares trade up 1% through the day so far in London trading.
Shell currently operates approximately 950 fuel stations across Malaysia, which positions it as the second-largest operator in the country, following behind the state-owned petroleum company Petronas. This potential sale is a strategic move under Shell's new CEO Wael Sawan and aligns with the company's grander plan to divest 500 fuel stations over the current and coming year. The objective of this divestiture is to sharpen the company's focus on profitability and efficient allocation of resources.
Despite the ongoing sale talks, Shell remains steadfast in its commitment to the mobility business in Malaysia, signaling that this transaction does not spell an end to its involvement in the Malaysian market. The move to offload a portion of its retail network comes amid a broader strategic shift that many oil and gas companies are making, as they adapt to changing market conditions and prepare for a low-carbon energy future.
For Saudi Aramco, the deal presents an opportunity to expand its retail footprint in Southeast Asia. At present, Aramco already has a significant presence in Malaysia through its 50% stake in the 300,000-barrel per day Pengerang refinery located in Johor. This joint venture with Petronas, however, does not currently extend to fuel stations.
If the sale comes to fruition, it would mark Saudi Aramco's entrance into Malaysia's fuel retail market, an industry where it has no current stakes. The expansion into retail could complement its existing refinery operations in the country and allow for greater integration within its value chain.
While the talks are ongoing and the deal has not yet been concluded, Shell's proposed divestment of its fuel station business in Malaysia is in line with the company's strategic priorities under CEO Wael Sawan. It also highlights the shifting landscapes in the global oil industry, where majors are re-evaluating their portfolios and seeking to optimize profitability amid broader energy transitions.
