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After BP, Shell is also planning to pull out of most african countries

Discussion in 'Biashara, Uchumi na Ujasiriamali' started by Ndahani, Apr 11, 2010.

  1. Ndahani

    Ndahani JF-Expert Member

    Apr 11, 2010
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    Kampala — ROYAL Dutch Shell PLC, a parent group of Shell Uganda, is pulling out of Uganda and 20 other African countries( Including Kenya and Tanzania) due to poor earnings and slow economic recovery.
    Ivan Kyayonka, the Shell Uganda country managing director, confirmed the development.
    "We are expressing a desire to dispose off all our downstream business in 21 countries, including Uganda, with the exception of South Africa. We are going to start discussions with potential buyers."
    The firm said it was working towards the sale of its oil-product retail business, which is valued at between $1.2b and $1.5b.
    On Friday, Shell executives from Johannesburg, South Africa, formally communicated to the employees the fate of Shell's interest through a video conference.
    This announcement is the latest step in Shell's drive to move out of less profitable businesses and focus on big projects that will raise its long-term oil and gas output.
    In its 2009 financial report, Peter Voser, the Shell overall boss, said downstream, meaning the combination of production, refining and marketing oil, is facing tough times.
    "There is a significant overhang of industry refining capacity, exacerbated by the economic down turn; that is why we have an initiative underway to refocus Shell's downstream footprint into fewer, more profitable markets with growth potential," he stated.
    Voser announced that the oil giant would chop another 1,000 jobs to save $1b. The lay-offs will be on top of the 5,000 employees that were laid off in 2009, he said.
    Last year, Shell sold some $1.2b of non-core downstream assets, bringing the five-year total to $11b. In early 2010, it announced plans to close the Montreal East refinery in Canada which produced 130,000 barrels per day. The cutbacks came as Shell announced poor earnings.
    Last year, Shell's profits fell 69% from $31b to about $10b, and revenue dropped from $458b to $278b. Shell particularly struggled in the fourth quarter, with adjusted net profit declining 75% from 2008.
    The company was hit hard in two areas: downstream and natural gas. Shell had moved into the gas business after struggling to find new oil reserves. But last year it was hit by the collapse in gas prices, caused by a drop in demand and increased supply from the US. Last year was even more difficult in the area of oil refining. Whole refineries were shut down worldwide as profit margins collapsed as a result of lower demand caused by the recession and the move towards more environmentally friendly cars.
    Shell was particularly affected because it has a strong presence in Asia and Europe, where profit margins have suffered the most.
    Shell's exploration and production business is also struggling, with output in 2009 falling by 2.4%, to 3.3 million barrels a day.
    In contrast, BP's production rose more than 4%, while ExxonMobil's output jumped more than 2%. Shell recently disposed off businesses in Greece and expects to sell refineries in the UK and Germany.
    Earlier this year there were reports that Shell is expected to make a partial withdrawal from the African continent. In 2008, Royal Dutch Shell moved away from 15 African countries, although it holds on to its most lucrative activities; exploration and production.
    Oilibya and Morocco Oil are said to be eyeing the firm's North Africa assets, while in southern Africa, Engen Petroleum is said to be interested.
    This means that if Shell goes ahead to pull out of Uganda and Kenya, Total will remain the single largest global brand in the retail petroleum business.
    Shell had positioned itself in the market with earlier acquisitions of Agip and BP, but seems to be reeling from growing competition from local and Asian firms.
    Over the recent years other global petroleum brands such as Esso, Agip, Mobil, BP, Caltex (Chevron) have vanished leaving only two global brands - Shell and Total.
    Mobil was bought by OilLibya, owned by the Government of Libya through Tamoil, while Caltex was recently taken over by Total.
  2. M

    Malila JF-Expert Member

    Apr 11, 2010
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    No company will be there for good.

    TIMING JF-Expert Member

    Apr 12, 2010
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    i am just concerned na ajira za watanzania... both BP and shell wameweza kuattract very competent young professionals na these news are always saddening
  4. Kivuko

    Kivuko Member

    Apr 12, 2010
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    if the government does not stop/control poor business practises from local/asian/middle eastern companies, Tanzanians will suffer from very poor gasoline quality. most of our cars are second hand, complement that with bad gasoline,they will never last 10+ years.

    TIMING JF-Expert Member

    Apr 12, 2010
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    this is very true... ndio tuna open market, lakini nadhani tusipoweza ku-scrutinize quality na kuweka fair competition kwenye hii sekta, tutaishia kupata hasara sana. naangailia hii issue kama ile ya madawa... quality ya dawa zetu inaendelea kuwa chini kutokana na mianya kama hii, we go for cheap alternatives