Royal Dutch Shell PLC has continued its venture into the Chinese oil market by assuming complete control of one of its joint venture gas stations in the country.
The deal, which sees Shell purchase the remaining shares that it didn’t own in Chongqing Doyen Shell Petroleum & Chemical Co., was completed on October 19, despite its significantly delayed public announcement. Shell forked out $1.9 billion to buy the remaining 51% of the company that it did not yet own.
Shell’s previously-existing joint venture, Doyen Shell, had a total of 41 gas stations dispersed throughout Chongqing as of 2014. In 2017, the joint venture generated a reported net income of 155 million yuan, as reported in an exchange filing by Doyen International Holdings Ltd.
Before 2018, Shell was unable to establish its dominance in the Chinese market. This was mainly due to government restrictions on foreign investment in gas stations, whereby Chinese partners were required to hold more than 50% of shares in chains consisting of more than 30 gas stations.
Following the lifting of these restrictions, Shell made its push to increase involvement in the Chinese market.
Today, foreign-owned stations account for 4% of all gas stations across China. Shell is one of the industry leaders in this category, operating over 1,300 stations in partnerships with NPC, Sinopec, and China National Offshore Oil Corp.
