BLOOMBERG: Shell Sells Fuels Units to Petrobras and Chile's Enap (Update2): Friday 23 December 2005
Dec. 22 (Bloomberg) -- Royal Dutch Shell Plc, Europe's second-largest oil company, sold its fuels businesses in Colombia, Uruguay, Paraguay and Ecuador to concentrate more on oil exploration and production
The Hague-based Shell sold units in Colombia, Uruguay and Paraguay to Petroleo Brasileiro SA, Brazil's state-controlled oil company, for about $140 million, Shell media officer Alexandra Wright said. Shell sold its Eucadorean fuels unit to Primax SA a a joint venture between Empresa Naciona de Petroleo, or Enap, Chile's state oil company and the finance, fuels and trading companies of Peru's Romero family.
``These sales are consistent with our strategy to simplify our business portfolio in Latin America,'' Wright said in a phone interview from London. ``Our strategy is to focus on upstream and profitable downstream activities.''
Shell's reserves will run out in less than nine years, the shortest life of similar non-government oil companies at current rates of production. In March 2004 the company cut its oil and gas reserves by 41 percent saying they had been overstated since 2002.
The company said Dec. 13 it would spend $19 billion on capital investments in 2006, more than a quarter more than the $15 billion budgeted for 2005.
Petrobras Chief Executive Jose Sergio Gabrielli, 56, plans to spend $56 billion to nearly double worldwide production to 3.4 million barrels of oil and natural gas equivalent by 2010. At current rates of production it will take 18 years for its reserves to run out. Petrobras is also seeking to expand in fuels distribution, with a focus on Latin America being a key part of a revised strategic plan released Aug. 19.
The Colombia, Uruguay and Paraguay purchases will give Rio de Janeiro-based Petrobras 261 service stations in the three countries as well as a fuel terminal facility and a lubricants mixing unit in Colombia, the company said in a statement to the Sao Paulo stock exchange. The final price will be determined by Shell and Petrobras during 2006, the statement said.
Petrobras' BR-brand gasoline network is Brazil's largest fuels distributor. The new service stations will include 38 in Bogota, 134 in Paraguay, and 89 in Uruguay, the statement said. Of the Paraguay stations, 52 have convenience stores. The Paraguay and Uruguay operations include aviation and maritime fuels, and asphalt businesses.
Calls to the Petrobras' executive offices and press department equesting comment were not returned.
``This is an emotional day for all at Shell as Shell has been in Uruguay since 1919,'' said Gerardo Giordano, Shell's general manager in Uruguay in statement sent by e-mail. ``I'm especially happy that all our personnel will remain in their jobs after the sale as there are no firings outlined in the sale contract.''
In Ecuador, Primax will take over 60 service stations and about 7 percent of the country's fuels distribution market, Enap said. Primax bought Shell's Peruvian operations in August 2004. All the takeovers are subject to regulatory approval.
The sales are part of a plan by Shell to focus its fuels operations on Shell-branded retail businesses in Brazil, Argentina, Chile, Central America and the Dominican Republic, Wright said.
On Feb. 7 Shell's Argentina country manager Juan Jose Aranguren said his company was staying in Argentina and had no intention of selling the company to Venezuelan state oil company Petroleos de Venezuela SA. At the time Venezuela's President Hugo Chavez said a sale to his country's oil company was imminent.
Shell plans to continue its exploration and production operations in Colombia, Shell said in a statement. Shell will continue selling some aviation and marine lubricants and bitumen to Petrobras in Uruguay.
To contact the reporter on this story:
Jeb Blount in Rio de Janeiro at email@example.com
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