| Business: FRENCH COMPANY TAKES OVER SHELL’S OPERATIONS |
But no drastic changes planned yet
Dionisia Tabureguci
Fuel supply to a few islands countries in the region will not be disrupted as previously thought when the multinational oil company Shell announced the sale of its Pacific operations early this year.
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Takeover...Total takes over some of Shell’s Pacific operations.
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Shell had announced the sale of its businesses in Samoa, Solomon Islands, Fiji, Tonga, Cook Islands, New Caledonia and Vanuatu.
Its operations in most of these countries have been taken over by another multinational corporation, the French company, Total France SA.
Total announced last month it has bought Shell’s business in Samoa, Tonga and Fiji.
In the Solomons, the National Provident has taken over its operations there.
Total’s acquisition covers retail, commercial, marine and lubricants activities.
It represents a network of nine terminals and depots and 20 service stations.
With a presence in New Caledonia and French Polynesia, Total’s downstream portfolio in the Pacific Islands already includes a network of 10 terminals and depots and 62 service stations, as well as lubricants, aviation fuels, and liquefied petroleum gas (LPG) activities.
This deal confirms Total’s growth strategy in the Pacific Islands,” Total announced in Fiji. While the sale has meant a wider presence and involvement of the French company in the region, there is no expectation of any major changes from the way Shell had operated its business, said Total (Fiji) Ltd’s managing director ,Vijay Kumar.
Kumar heads Total Fiji Ltd, which is a newly created entity that looks after the operations in Samoa, Fiji, and its subsidiary in Tonga.
“The expansion roughly doubles the volume of oil products sold by Total in the Pacific region,” said Kumar in an interview with Islands Business on Total’s Pacific expansion.
“Total does not contemplate drastic changes in the initial period.
“Our main objective is to have a smooth transition to ensure the people and authorities here will have the security of supply they need.
“Total will roll out its usual marketing strategy, based on service, quality and customer care. It’s also committed to retain the workforce left behind by Shell for at least two years.”
Like the global operation of its predecessor, Total’s business worldwide covers the entire oil and gas chain and is also involved in the exploration and development of renewable energy sources.
But the Pacific operation will remain a small portion of that with the company only involved at this point with the sale of mineral fuel and lubricants to the region.
Although it’s early days yet, Kumar said the significant presence now of Total in the region would see it continuously strengthening its position and would be interested in opportunities to do so.
When this edition went to press, Kumar said the company had made a successful bid for Shell’s Cook Islands business, which remained subject to pre-emption rights and regulatory approvals.
But in the Solomons, National Provident Fund takes over
Solomon Islands’ National Provident Fund (NPF) is expecting a handsome return of S$10 million profit per annum in the wake of its takeover of Shell in the Solomons.
With fuel driving the economy of Pacific countries—NPF’s involvement in the fuel game is a lucrative deal for Solomon Islanders, who by law are NPF members and contribute a portion of their earnings to the fund.
NPF spent over S$40 million in its takeover of Shell’s operations. Initial projections are that the NPF’s new venture with local company GRP and Associates, to be called South Pacific Oil, will recover its investment within the next four years.
NPF general manager Tony Makabo said the investment reflects the fund’s aim to provide returns through a wider investment portfolio.
“South Pacific Oil company Limited is one of those investments that will provide high returns,” says Makabo.
Initial projections show a return of S$10 million in its first year.
Makabo says the figure is expected to rise as Solomon Islands’ economy continues to improve and the fuel market expands.
“This investment is good news for the country and everyone should be excited. The energy sector has been a profitable one,” says finance minister Gordon Darcy Lilo.
GRP’s experience in fuel management in running depots in the Western Province and NPF’s credible management expertise will reduce the risks associated with this type of venture, Lilo says.
“This is an exciting investment and very lucrative. This country cannot go without oil. Economic development and transportation and rely heavily on energy.”
The takeover covers Shell’s aviation and marine lubricants, commercial fuel and distribution business, including two storage and distribution depots.
As part of the takeover, South Pacific Oil has offered to continue employing Shell’s existing workforce.
South Pacific Oil will begin operations on December 15.
NPF’s latest investment adds to an impressive portfolio that includes majority shares in Solomon Islands telecommunications provider, Telekom, and proposed investment in Papua New Guinea’s Bank South Pacific which will be taking over the National Bank of Solomon Islands next year.
—By Evan Wasuka
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