Shell is preparing to divest from downstream operations in South Africa as a result of an internal portfolio review, Shell said in a statement on Monday reported by Reuters and confirmed in an interview with the Daily Maverick just hours later.
Shell holds a majority share in Shell Downstream SA (SDSA), which was formed by the merger agreement between Shell South Africa and Thebe Investment Corporation a decade ago. The partnership was intended to merge Shell’s marketing and refining business, with Thebe, a black empowerment group, holding a 28% stake in the downstream business, as reported by Reuters.
According to the Daily Maverick, Shell and Thebe Investments are still in heated debate over 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 said in a statement in response to Daily Maverick’s queries, adding that the decision followed a full review of “… the Downstream and Renewables businesses across all regions and markets in line with Shell’s focus on performance, discipline, and simplification”.
SDSA may have landed on Shell’s divestment list due to the fact that a key asset–the Sapref refinery in Durban–has been shut down since 2022, when partners BP and Shell implemented a spending freeze and ordered the refinery’s operations to shut down.
The refinery has been problematic for Shell since then, with fatal flooding in the area causing major damage to the facility, which at one point represented more than one-third of South Africa’s refining capacity, according to Reuters.
In March, Shell also said in its energy transition strategy report that it would divest from 1,000 fuel stations this year and next as it works on EV charging stations instead.
Offshore South Africa, Shell is still going strong despite mounting environmental protests. Shell has confirmed for the Daily Maverick that it intends to exit South Africa downstream operations.