KUALA LUMPUR: Shell Malaysia Trading Sdn Bhd (SMTSB) has signed a sale and purchase agreement with Oman's National Gas Co SAOG (NGC) to divest its liquefied petroleum gas (LPG) business in Peninsular Malaysia to the latter at an undisclosed amount.
SMTSB managing director Azman Ismail said the divestment was part of its strategy to concentrate on other businesses and streamlined its downstream business.
“The company took position to consolidate and focus on its business. We looked for a party to take care of the LPG business while we focus on other things. It is a very commercial decision,” he said after a signing ceremony between SMTSB and NGC Energy Sdn Bhd.
Azman said the divestment underwent a thorough tender process for about a year and NGC succeeded based on its competitive bid. He said the sale of its LPG business would not affect other businesses and the handover would be a “seamless transition”.
However, he said the deal was still pending regulatory approval as any company looking to retail petroleum products needed to obtain a licence.
NGC chairman Sheikh Abdulla Suleiman Hamed Al-Harthy said NGC was looking at possibility of expanding Shell's LPG distribution operations and would be looking at introducing new applications in Malaysia. “There will be no reductions, if anything it will be an expansion,”
“Hopefully, this will not be the first adventure for us in Malaysia,” he said, adding that the LPG business was NGC's first investment in Malaysia.
NGC chief executive officer Goutam Sen said that Shell's LPG operations currently distributed 22,000 to 25,000 tonnes of LPG per month accounting for about 22% of the Malaysian market.
He said NGC would be looking to expand LPG usage to the industrial sector and currently LPG was mainly used for households as fuel.
Goutem said that 80% to 85% of the LPG gas was currently sourced from the Shell refinery in Port Dickson.
He said NGC had also signed a long-term contract with Shell for that.
He reckoned the regulatory approval would take a few months.