Addis Ababa: Sunday December 23, 2007
Oil giant Shell Ethiopia is negotiating with the new entrant in the country’s oil business, Nile Petroleum Company (NPC), and selling its operations in Ethiopia.
The state-owned Sudanese Nile Petroleum Company (NPC), which was registered in 2003 in Ethiopia, is negotiating to take over Shell’s gas stations and the main depot in the next few months.
Sources told Capital that the two parties have been negotiating for the past two months and an agreement is expected to be finalized and announced by January 2008.
Shell will sell its depot and headquarters in Addis Ababa and 190 retail stations across the country.
Shell Ethiopia has planned to move completely out of country in the next nine to ten months, due mainly to the price margin which is controlled by the government.
One of the country’s largest operators in petroleum distribution and marketing, Shell Ethiopia, which has been in operation for over 50 years, decided to move out of the retail in Ethiopia after acquiring the ex-Agip depots and retail stations in 2000. Shell recently sold the two fuel depots and 80 retail stations for reasons of economic strain caused by the escalating international oil prices.
The company claims that dealer margins had been declining since 2000 and operating costs have been on the rise.
Shell had decided to sell the ex-Agip depot in Addis Ababa and the Dire Dawa Shell depot as well as 80 of the 270 retail stations to Kobil Ethiopia a few years back.
Shell, established in 1897, operates in more than 140 countries and employs 112,000 people.
The company, which has a strong presence in Africa, started its operations in Ethiopia in November 1929 and took its current name, Shell Ethiopia Limited, in April 1964.
The National Oil Company (NOC) and Yetebaberut Biherawi Petroleum (YBP) have been functional ever since, established with 100 million Br and 21 million Br capital respectively. The Kenyan Kobil and NPC joined the Ethiopian market recently. Shell, Mobil Agip and Total have monopolized the Ethiopian market for the last 40 years; all except Mobil and Agip are still operational.
NPC, established with a capital of 25 million dollars and registered in Ethiopia in February 2003, works on petroleum exploration, refining, storage and marketing in Sudan.
NPC was established in 1954 under the name Nile Import and Trading Oil Company, as a subsidiary of Total, with the Sudanese government holding a 75% stake until 1993.
NPC was nationalized in 1993, having a 55% share of the marketing and distribution of petroleum products in Sudan.
Litigation against Shell Ethiopia…