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.
“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.
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