Shell (Jamaica) Country Chairman, Mario Vulinovich
Al Edwards, Financial Editor
INTEGRATED PETROLEUM company Shell, is denying that it is currently in negotiations to sell its Jamaican retailing arm to French company Total, who recently entered the Jamaican market.
Shell has already divested itself of its eastern Caribbean businesses and is currently undergoing a portfolio review thus heightening speculation that it is susceptible to overtures from other petroleum retail operators.
Shell (Jamaica) Country Chairman Mario Vulinovich vehemently denied that it is about to sell its Jamaican interests to Total. He issued a release that read: "Jamaica is still part of Shell's portfolio review. Speculations are normal when these processes are taking place. We do not comment on speculations or market rumours. At this stage, no further decisions have been made for Jamaica and we do not know whether we will be part of the divestment portfolio.
"To date our portfolio reviews have resulted in retention of a number of businesses in Brazil, Central America, Argentina and Chile, together with divestments in Peru and Venezuela and development of alliances in the Eastern Caribbean.
STRATEGIC ALLIANCE
"In the case of the sale of the Eastern Caribbean businesses and strategic alliance with SOL Group, there was a full three months between our announcement and the sale taking place."
In September of last year, Shell announced that it would be spending $400 million to improve its operational facilities in order to maintain its market leadership. Of that sum $300 million was earmarked on the service station business. Shell outlined plans to demolish and reconstruct stations in Montego Bay and St. Ann.
Mr. Vulinovich declared, "We have confidence in Jamaica and are investing not just in the retail part of our business. We earmarked $100 million for liquefied petroleum gas (LPG) annually."
Shell has 56 service stations islandwide. It supplies petroleum products to the retail and commercial market. Some of its major customers are in the mining industry, highway contractors and the electricity company.
CRITICAL MASS
Total acquired Roy D'Cambre's local petroleum retail outlets National Fuels last year and is looking to establish itself in Jamaica. Obtaining critical mass would be one way of doing so.
Last year saw a four per cent growth in the petroleum industry but margins are being eroded and pricing has become even more aggressive. Escalating world oil prices continue to impact local retailing. Last year the country's fuel bill was placed at US$1 billion and was largely blamed for the rise in inflation. Yesterday oil prices stood at US$52 a barrel. A tight global supply and demand balance and a weaker dollar have helped to keep prices high.
