Shell to Sell its Malaysian Division to Saudi Aramco

Energy giant Shell is reportedly in discussions with Saudi Arabia's state-owned Saudi Aramco to offload its gas station business in Malaysia, which constitutes the second-largest network in the country. Sources familiar with the discussions informed Reuters about these talks, suggesting that a potential deal could amount to up to US$1 billion.

While Shell declined to comment on the ongoing negotiations, it emphasized the significance of Malaysia as a key market for the company. Similarly, Saudi Aramco refrained from providing any comments on the matter.

Shell currently fully owns approximately 950 fuel stations throughout Malaysia, making it one of the largest networks in the Southeast Asian nation after Petronas. Discussions regarding the potential sale commenced in late 2023, and sources suggest that a deal could be finalized in the coming months, with an estimated value ranging from 4 billion to 5 billion ringgit (US$844 million to US$1.06 billion).

Apart from its fuel station business, Shell is also involved in selling industrial lubricants, offshore crude oil and natural gas production in Sarawak and Sabah states, and has stakes in two liquefied natural gas (LNG) ventures.

The proposed sale aligns with Shell's strategy, led by CEO Wael Sawan, to streamline its operations and focus on the most profitable segments. As part of this strategy, Shell aims to divest around 500 gas stations this year and the next. Additionally, the company is currently in the process of selling its Singapore refinery and petrochemical complex.

The move to divest its Malaysia fuel stations is reportedly consistent with Shell's plan to sell its Bukom Island refinery in Singapore, which supplies fuel to its Malaysian network.

While Saudi Aramco doesn't operate fuel stations in Malaysia, it holds a 50% stake in the Pengerang refinery in Johor, alongside Petronas. Aramco has a presence in the fuel station business through joint ventures with TotalEnergies and S-Oil Corp. in other regions, including Saudi Arabia.