Shell sells North Pacific islands businesses to Delgado firm

MANILA, Philippines - The Shell Group has reached an agreement to sell its downstream marketing businesses in North Pacific Islands (NPI) to IP&E Holdings Llc., a wholly-owned company by the Delgado family. 

NPI includes Guam, Saipan and Palau. 

IP & E Holdings is a subsidiary of Prospector Investments Ltd., a member of the Delgado group of companies that includes Citadel Holdings in the Philippines. The Delgado group owns a diversified private equity holding and management company that had its beginnings in the petroleum industry as far back as the 1940s. Today, it has investments in aviation services, logistics solutions, telecommunications, fuels and lubricants supply and marketing.

In a statement, Shell said the deal, which is still subject to regulatory approvals and consents, follows a review of its downstream marketing businesses in the NPI and is consistent with the company’s strategy to concentrate on its global downstream portfolio.

The agreement covers the sale of Shell’s retail, commercial and aviation businesses in the NPI. 

Under the terms of the deal, the retail network will remain Shell-branded through trademark licensing agreements, while aviation will be serviced through a technical service agreement.

Under separate agreements, the buyer will also be appointed as distributor of Shell-branded lubricants and service Shell marine product customers for NPI markets. 

Shell’s decision to move to a distributor model supports its portfolio focus drive and follows a number of similar deals in other countries. The agreement is also subject to regulatory clearance.

Industry watchers are speculating whether Shell will also be divesting its retail business in the Philippines following its decision to keep holding back its refinery expansion in the country and amid recent controversies in the oil industry such as the Pandacan relocation, court case on alleged overpricing and the imposition of Executive Order 839 that made oil companies keep prices at Oct. 15 levels, which caused Shell to lose more than P400 million.

The purchase of Shell’s downstream marketing business in the North Pacific adds to the Delgado family’s portfolio of investments in the region. 

Upon the completion of the transaction, the family would have invested approximately $150 million in the region from the time it acquired Verizon’s fixed and wireless assets in 2005. 

Sumitomo Corp. of Japan, one of the largest Japanese trading companies, is the family’s strategic partner in IP&E, the leading telecom company in the North Pacific.

Royal Dutch Shell is a global leader in the downstream business. The company has some four million barrels of crude oil per day of worldwide refining capacity and is the world’s largest single branded fuels retailer with about 46,000 service stations and operations in 90 countries and territories around the world.