[imagesource:Facebook/Shell Marchios Service Station]

Shell Plc has confirmed recent news that it’s planning to get out of South Africa.

While I would like to think all the boycotting and protesting of the Shell garages over the company’s shoddy environmental practices and attitudes has finally made a dent, that doesn’t seem to be the case.

Rather, Shell plans to divest from the Rainbow Nation after a fallout with BEE partner Thebe Investment Corporation, among other reasons.

In a statement responding to Daily Maverick‘s enquiries, the oil giant has chosen to reshape its Downstream portfolio and plans to sell its shareholding in Shell Downstream South Africa (SDSA).

That means they’ll be selling off their downstream assets, including more than 500 service stations or forecourts nationwide, many of which have been in operation since 1902.

It said this decision was taken in the wake of a comprehensive review of “… the Downstream and Renewables businesses across all regions and markets in line with Shell’s focus on performance, discipline, and simplification”.

Shell didn’t comment on the reports that it was locked in a row with its Black Economic Empowerment partner Thebe Investments over the value of the latter’s stake.

Shell and Thebe have been at it since 2022 when Thebe communicated to Shell its intention to invoke its “opt-out” clause, seeking to liquidate its shares to reinvest the proceeds in expanding the company.

Thebe Investment Corporation owns a 28% stake in Shell Downstream South Africa and alleges that Shell intentionally prolonged the resolution of their dispute to facilitate its departure from the country.

BusinessTech notes that Shell and BP Plc’s southern African unit jointly own the Sapref refinery — the nation’s biggest — in Durban on the country’s east coast.

The 180,000 barrel-a-day facility halted operations ahead of a sale in 2022 and was subsequently damaged by floods.

Furthermore, in 2022, the government released fresh regulations mandating refiners to adhere to low-sulfur fuel standards by 2023. This move, as conveyed by a lobby group advocating for fuel manufacturers, resulted in a significant portion of the nation’s fleet being outdated. At that point, Shell said it was reviewing its shareholding in Sapref.

In its latest energy transition strategy report in March, Shell said it planned to divest from 1,000 service stations in 2024 and 2025 as it pivots to charging options for the electric vehicle market.

It seems that South Africa’s service stations fit that bill.

This action marks the end of a long-standing era, given Shell’s 120-year tenure as a prominent entity in South Africa’s energy sector. Throughout its history, Shell faced scrutiny from anti-apartheid activists during the 1980s. The oil company donated the Shell House in downtown Joburg to the African National Congress (ANC), which became the party’s (former) HQ.

Daily Maverick says this development will likely be perceived as another setback for South Africa’s attractiveness as an investment hub, following mining behemoth BHP’s acquisition bid for Anglo American, which notably excluded a significant portion of its assets within the country.

Craig Morkel, Chairman of the Gas Economy Leadership Team at The South African Oil & Gas Alliance (SAOGA), said via EWN that the fuel providers left behind will reap the benefits of Shell’s exit.

“Whoever continues in South Africa will enjoy the demand until we switch to electric vehicles.”

As long as there is demand for fuel in our country, the best thing for the industry will be to supply this most affordably, says Morkel.

[source:dailymaverick]