Written by; M Saad Anwar Jagial/ Umaima Saddique/ Rehan Shafiq/ Abdul Raffay Idrees
These days, Pakistan’s economy is facing an ample number of obstacles, that have outcome in a profound change in the energy industry as a whole. The entry of Aramco and the exit of Shell is not only a shift in market players; rather, it is a story of one man’s loss being another man’s gain.
Shell Bids Farewell: The Curtain Falls on an Icon
Corporate titan, Shell’s subsidiary has been operating in Pakistan since 1947. It is one of the oldest international oil and gas companies. The company’s monetary performance in Pakistan has faltered in recent years due to multiple challenges. In 2022 the company faced a net loss of Rs. 72 million. Consequently in 2023, dealt a considerable decrease in operating profit of Rs. 3.45 billion. After a remarkable legacy in the country, it is bowing out by divesting its 77.42% stake.
Multiple factors collide which include Pakistani currency
devaluation, delayed payments by the government and the misalignment with the parent company’s strategic goals which is to invest in a profitable market as well as to work on renewable energy resources, all these variables contributed to the withdrawal of the giant.
Entry of Aramco: A New Dawn for Pakistan’s Energy Landscape
An energy behemoth with vast resources, Aramco, made its debut in Pakistan by purchasing a 40% share in Gas and Oil Pakistan Limited. The action supports Pakistan’s expanding energy needs while advancing Aramco’s worldwide expansion plan to find markets for crude oil and downstream goods. Pakistan is an appealing target for Aramco due to its higher consumption of energy and its convenient location close to important markets like China and India. The company’s involvement is in line with Saudi Vision 2030, which aims to diversify the Saudi Arabian economy and lessen its dependency on oil income through overseas investment and strengthening international ties. Aramco also aims to build a large refinery and petrochemical complex in Gwadar as part of its interests in Pakistan.
The repercussions are enormous, ranging from increased
energy security to significant improvements to the national economy. The deal’s success will depend on a number of aspects, such as approval from regulatory agencies and the general political and economic conditions in Pakistan.
Seventh Semester students, Accounting and Finance department, UCP.
