Al Edwards, Financial Editor
IT NOW transpires that integrated oil company Shell Jamaican operations is to be sold, for the sum of around US$100 million, the Financial Gleaner understands.
Speculation has been rife that Shell is looking to get out of Jamaica following a portfolio review of its Caribbean operations. Shell has already divested itself of its eastern Caribbean businesses to Simpson Oil Limited (SOL). The SOL Group is an affiliate of the Interamerica Trading Corp (ITC).
The Financial Gleaner understands that the deal was for a sale and purchase agreement relating to the divestment of Shell oil product businesses in Barbados, St. Lucia, Netherlands Antilles, St. Kitts and Nevis, British Virgin Islands, Anguilla, Grenada, St. Vincent, Antigua, Dominica, Belize, Guyana and Suriname valued at US$200 million (J$1.2 billion).
Former Shell Country chairman Mario Vulinovich, who left that position to return to his homeland, New Zealand, last month said at the time:
"Jamaica is still part of Shell's portfolio. Speculations are normal when these processes are taking place. We have confidence in Jamaica and are investing not just in the retail part of our business. We have earmarked $100 million for our liquefied petroleum gas (LPG) operations annually." Mr. Vulinovich was replaced by Mr. Roger Bryan.
NEGOTIATIONS
The company denied it was in negotiations with French oil giant Total to sell its retail arm to the French company that has established a presence in Jamaica.
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 for the service station business.
The Financial Gleaner understands that the Trinidadian family run IGL, Total and Facey Commodities are included among the bidders. Facey Commodities' executive Dr. Nigel Clarke, however, denied that his company was part of the bid process. If IGL was to be successful it would in effect give it 80 per cent of the cooking gas market.
Shell has 56 service stations islandwide. It supplies petroleum products to the retail and commercial markets. Some of its major customers are in the mining industry, highway contractors and the electricity company.
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 oil prices continue to impact retailing. Earlier this week oil prices rose as high as US$59 a barrel. Last year the country's oil bill came in at around US$1 billion and this year that figure will be exceeded.
