Ukrnafta to acquire 51% of Shell filling station chain in Ukraine

Ukraine's Ukrnafta has signed an agreement with Shell to acquire a 51% stake in Alliance Holding LLC, the operator of Shell's filling station network in Ukraine, the company announced on Tuesday.

"In the coming days, Ukrnafta and Shell will jointly apply to the Antimonopoly Committee for merger approval, a mandatory step to finalize the transaction," the company said.

Once approved, Ukrnafta will assume full shareholder rights and obligations.

Investment bank Rothschild & Co provided deal valuation and advisory services, with legal support from Sayenko Kharenko and auditing by KPMG. The deal's value was not disclosed.

"The Naftogaz Group is not only adapting to wartime challenges but is also strengthening its position. The profits from Alliance Holding will flow into the state budget as dividends," Naftogaz head Oleksiy Chernyshov stated.

Ukrnafta plans to rebrand all Shell stations within a year, honor existing B2B contracts, and retain the company's 1,550 employees.

According to CEO Serhiy Koretsky, acquiring a business operated for 15 years by a reputable international group aligns with Ukrnafta's strategy to expand its gas station network and market share.

Shell currently ranks among Ukraine's top 10 fuel networks, operating 118 filling stations and holding the ninth-largest market share by fuel sales and the seventh-largest market share by the number of filling stations located mainly in areas with heavy traffic as of September 2024.

The Shell-Alliance joint venture began operations in 2007, with Shell owning 51% and Russia's Alliance 49%. The partnership combined Alliance's 150 filling stations with Shell's capital, licenses and branding.

In 2014, Russian businessman Eduard Khudainatov, later sanctioned by the EU and Ukraine, acquired Alliance's oil assets. Ukrainian courts subsequently nationalized Alliance's 49% stake in 2024, transferring it to Ukraine's State Property Fund.

As of November 2024, Overseas Investments, part of the Shell group of energy and petrochemical companies, registered its 51% ownership under court rulings.

Ukrnafta is Ukraine's largest oil extraction company and operates a national network of filling stations. In March 2024, the company took over the management of Glusco assets, and now operates 545 filling stations – 460 of its own and 85 under management.

The company is implementing a comprehensive program to renew operations and modernize the format of its filling stations. Since February 2023, Ukrnafta has been offering its own fuel vouchers and NAFTA Cards, which are sold to both legal entities and individuals through Ukrnafta-Postach LLC.

The largest shareholder in Ukrnafta is Naftogaz Ukrainy, which holds a 50% plus one share. In November 2022, the General Staff of the Armed Forces of Ukraine decided to transfer the corporate rights of the company, previously owned by private shareholders, to the state. The Ministry of Defense now oversees these shares.