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Engen Snaps Up Shell’s Business In Zimbabwe

The Zimbabwe Standard

Engen Snaps Up Shell’s Business In Zimbabwe

Saturday, 12 July 2008 16:28

PETROLEUM products group Engen announced yesterday it had concluded a sale and purchase agreement to buy Shell’s downstream business interests in Lesotho and crisis-torn Zimbabwe, where Engen said it was taking a long-term view that the economy would recover.

Engen’s foray into Zimbabwe comes as that country’s political and economical outlook becomes even bleaker and after this week’s condemnation of the Harare government at the Group of Eight summit. The world’s richest countries have put pressure on the United Nations to tighten the noose on the Zimbabwean government through targeted sanctions.

The acquisitions, whose value was not given, come hot on the heels of another in Gabon, where Engen bought Shell’s interest in petroleum products and distribution company Pizo.

In December last year, the company also acquired Shell’s 60% interest in Shell DRC (Democratic Republic of Congo). Engen spokeswoman Tania Landsberg yesterday said the recent acquisitions were in support of the company’s foray into the rest of Africa. “This is part of our strategy. Our focus is on sub-Saharan Africa. Africa is where our growth is,” Landsberg said. Engen has a presence in 17 African countries.

In Zimbabwe, Engen — owned by Malaysian oil company Petronas (80%) and black economic empowerment group Worldwide Africa Investment Holdings (20%) — would purchase Shell’s share in a joint venture with BP, Landsberg said.

She said the company acknowledged that the timing of the deal was sensitive. “We do not get involved in the politics,” she said. Engen had taken a long-term view of the Zimbabwean situation. “We believe that, in the long term, this is a good deal. We believe that Zimbabwe will recover,” she said.

Engen CEO Rashid Yusof said yesterday: “While Zimbabwe’s economy has declined sharply over the last decade, it still has good infrastructure which we believe will form the basis of renewed economic growth, once the current political situation is resolved.”

Engen said it already had seven retail sites in Lesotho and the acquisition would see the group capture 35% of that country’s market.

Landsberg said the group was not in a position to divulge the value of the acquisitions. “It is part of the confidentiality agreement with the seller,” she said.

Yusof said the deals were still subject to the approval of the respective countries’ governments “as well as other regulatory requirements”.

“Engen welcomes these investment opportunities. We have the utmost confidence in our future in both countries,” Yusof said.

Shell spokesman Dennis Matsane said yesterday there was nothing unusual about Shell’s exit from downstream markets in several countries. The deals were consistent with the multinational’s “more upstream and profitable downstream” strategy. “We remain committed to Africa,” he said.

In its strategy, Shell has said it wants approximately 80% of its capital investment this year to be upstream — in the exploration of oil and gas and oil sand projects. — Business Day.

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