Why Shell Exited Indonesian Fuel Retail, and What Sefas Group Faces Next
Sefas Group, one of Indonesia’s largest industrial energy and lubricant distributors, has officially signed an agreement with Shell to acquire 100 percent of the latter’s downstream retail network of gas stations. The acquisition remains subject to regulatory approvals from relevant Indonesian government bodies as well as standard closing conditions. Both parties are targeting total completion before the end of 2026.
The Sefas Group, originally founded in 1997 as Sefas Pelindotama in East Kalimantan, has been the primary local distributor of Shell Lubricants in Indonesia for over 25 years, supplying industrial oil, lubricants, and fuel to sectors such as mining, logistics, marine, and manufacturing. By acquiring 100 percent of Shell’s local downstream retail network of roughly 200 fuel stations, Sefas is expanding from B2B industrial supply into direct-to-consumer retail. However, because the group lacks local retail brand recognition in fuel, it maintains the Shell brand via a long-term licensing agreement.
This acquisition is driven by the long-term prospects of Indonesia’s energy retail sector, as the company sees the country’s growing national energy demand as still providing room for business expansion.
Shell’s decision to sell its retail gas station network across Indonesia is caused by a couple of factors. Firstly, Shell plc has been systematically downsizing its global retail petroleum footprint as the company is redirecting capital toward higher-return ventures, low-carbon initiatives, and its more profitable business units. While it will not serve the Indonesian end-consumer, Shell is keeping its lucrative lubricants business and blending plants in Indonesia.
Secondly, private fuel retailers in Indonesia operate under tight import quotas managed by the Ministry of Energy and Mineral Resources to prevent excessive imports that put pressure on the current account and rupiah. Over the past year, Shell hit severe quota limits, forcing it to source fuel domestically through Indonesia’s state-owned energy giant Pertamina. However, this created severe supply chain bottlenecks, leading directly to the widespread stock shortages, namely empty pumps for Super, V-Power, and V-Power Nitro+.
Thirdly, the problem for any private player in Indonesia’s retail fuel market is that Pertamina is very dominant as it is backed by heavily state subsidised products, most notably Pertalite and Biosolar, while Pertamax prices are kept artificially low thanks to generous reimbursements from the State Budget to Pertamina.
Therefore, high global crude prices combined with government price caps make it difficult for unsubsidised private operators to maintain healthy profit margins without losing volume to Pertamina. By shifting to a licensing model through the deal with Sefas Group, Shell transfers the supply-chain risks, local regulatory navigation, and capital expenditure of running around 200 gas stations to another company, while continuing to earn licensing fees and keep the Shell brand present in the region.
However, the Sefas Group was immediately confronted with the issue of gasoline supply that haunted Shell. Sefas can only ensure efforts to secure gasoline-type fuel availability at Shell stations once the downstream oil and gas business acquisition transaction is fully completed. The group’s management stated that it is currently coordinating with regulators and relevant stakeholders to ensure supply continuity. Currently, only Shell V-Power Diesel can be bought at Shell’s gas stations in Indonesia, at the price of IDR 21,910 per litre.
Key challenges for the company include its ability to guarantee fuel supply, keep prices competitive, increase sales volume, and secure healthy margins. The prospects for the conventional gas station business remain open because internal combustion engine vehicles will not disappear anytime soon in Indonesia. However, competition will intensify amid electric vehicle growth, Pertamina’s dominance, and rivalry among private station operators. Therefore, gas stations need to transform into ‘energy retail stations’ rather than just places to buy fuel. There may also be room for the development of minimarkets, food and beverages, lubricants, vehicle services, and electric vehicle charging points as strategies to generate additional revenue streams.