Energy
Shell to exit South Africa’s energy downstream sector after review of global operations
Global oil giant, Shell Plc, has opted to sell off its majority stake in a South African downstream subsidiary following an extensive evaluation of its operations globally.
This is contained in a statement issued on Monday by the energy company, according to a report by Reuters.
Shell Downstream SA (SDSA) was established when Shell South Africa and the black empowerment firm, Thebe Investment Corporation, decided to combine Shell South Africa Marketing and Shell South Refining businesses 10 years ago.
Thebe acquired a 28% equity share in the venture.
A decade later, Shell said it would still be exploring the country’s offshore, following pressures from opposition from environmental campaigners who launched a series of court action against the energy company.
- “As a result of this review, Shell has decided to reshape the downstream portfolio and intends to divest our shareholding in SDSA … this decision was not taken lightly,” a Shell statement said.
It did not specify when the decision took effect.
More Insights
Shell announced on Monday that during the divestment process, it would focus on maintaining SDSA’s operational effectiveness and preserving its brand identity.
- SDSA’s principal asset, Sapref, which is the largest refinery in South Africa located in the east coast port city of Durban, has been inactive since 2022.
- This followed a decision by Shell and its refinery joint venture partner, BP (BP.L), to implement a spending freeze and cease operations at the refinery.
- In that same year, flooding along the coast, which resulted in nearly 400 deaths, inflicted severe damage on the plant, which at that time accounted for approximately 35% of South Africa’s refining capacity.
- Two years ago, South Africa’s Central Energy Fund expressed interest in Sapref, which has a nameplate capacity of 180,000 barrels per day, in its efforts to address energy security issues.
Similar Trend in Nigeria
- In a similar trend in January, Shell reached an agreement to sell its Nigerian onshore oil assets to a local consortium for over $1.3 billion, pending government approval.
- According to the energy company, the move aligns with Shell’s strategic objective to exit the challenging operating environment I in the Niger Delta region.
- In addition to the initial sum, Shell anticipates receiving extra payments of up to $1.1 billion. The purchasing consortium, named Renaissance, comprises ND Western, Aradel Energy, First E&P, Waltersmith, and Petrolin.
