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Shell acquires rival BP in Kenya
27/4/2007 16:12

Shell Petroleum Company, a subsidiary of the Royal Dutch Shell plc, yesterday announced the acquisition of 50 percent shareholding in British Petroleum (BP) Africa, in a deal which would give it a larger share of the market.
Shell Kenya Managing Director Patrick Obath said the buyout was given a conditional approval by the Kenyan regulatory authorities, but declined to disclose how much was agreed on for the purchase deal.
Shell and BP have been running a joint venture partnership and have shared assets on the downstream activities of the profitable oil marketing industry. The two companies are joint owners of the Kenya Petroleum Refineries.
"This approval marks the beginning of a new and exciting chapter for Shell in Kenya. For the first time in many decades, the Joint Venture (JV) companies will operate under the brand of Shell," said Obath, who also chairs the company's board in Kenya.
BP announced its decision to bail out of the Kenyan market in mid-2005, citing low returns on the sale and distribution of oil products in Kenya and opened tenders to interested bidders in London. The negotiations lasted for more than a year.
BP has been operating as a Joint Venture Partner of Shell but it has always stood as a dominant market player. Shell previously owned 50 percent stake in BP.
The purchase agreement does not affect the employees of BP, who have been operating in the same premises as those used by the rival Shell.
"Our priority is to work with the government, staff and the Joint Venture Partners to ensure a smooth transition," Obath told a news conference in Nairobi.
Kenyan law guards against any acquisitions that may make any player dominant enough to dictate commodity prices. The monopoly laws in Kenya do not accept a single player to control 50 percent market share.