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Shell exits South Africa downstream sector

Shell exits South Africa downstream sector

Shell has announced plans to sell off its downstream operations in South Africa following an internal review of its portfolio.

The company announced this in a statement on Tuesday, reported by Reuters and later confirmed in an interview with the Daily Maverick.

Shell currently holds the majority share in Shell Downstream SA (SDSA), which was created through a merger agreement between Shell South Africa and Thebe Investment Corporation ten years ago.

The partnership aimed to combine Shell’s marketing and refining business with Thebe, a black empowerment group, owning a 28% stake in the downstream business. However, there is ongoing disagreement between Shell and Thebe Investments regarding the value of Thebe’s stake in the project.

Read also: ExxonMobil, Shell others to divest 26 oil blocks in Nigeria

“Shell has decided to reshape the Downstream portfolio and intends to divest our shareholding in Shell Downstream South Africa (SDSA),” the oil giant stated in response to Daily Maverick’s inquiries, noting that the decision came after a comprehensive review of the Downstream and Renewables businesses across all regions and markets in alignment with Shell’s focus on performance, discipline, and simplification.

During the divestment process, Shell announced on its commitment to maintaining SDSA’s operational capabilities and brand presence.

One of SDSA’s key assets, the largest refinery in South Africa, Sapref, located in Durban on the east coast, has been inactive since 2022. This decision followed a spending freeze and operational halt agreed upon by Shell and its joint venture partner, BP.

The plant suffered severe damage from coastal flooding that claimed nearly 400 lives the same year. Sapref, which previously contributed approximately 35% of South Africa’s refining capacity, caught the attention of South Africa’s Central Energy Fund two years ago due to its nameplate capacity of 180,000 barrels per day, as the country seeks to address energy security concerns.

Recall that in January Shell had announced its plans to sell its Nigerian onshore oil and gas assets for a total of $2.4 billion to a consortium led by Nigerian independent energy company, Renaissance Oil.