Business

Shell Poised To Exit South Africa’s Downstream Unit, To Divest Majority Stake

Oil giant Shell has revealed its intention to divest its majority shareholding in Shell Downstream SA (SDSA), a South African downstream unit, following a thorough assessment of its global operations. 

The decision, announced on Monday, signifies Shell’s strategic move to restructure its downstream portfolio.

SDSA was established through a merger between Shell South Africa and Thebe Investment Corporation, with Shell holding the majority stake. 

However, Shell’s decision to divest its shareholding reflects a shift in its downstream strategy, although the exact timing of the decision’s implementation was not disclosed.

Despite Shell’s long presence in South Africa, the decision to divest comes amidst ongoing opposition from environmental activists regarding Shell’s offshore exploration activities in the country, which have sparked legal challenges.

As part of the divestment process, Shell has pledged to ensure the preservation of SDSA’s operational capabilities and uphold its brand presence. However, the fate of SDSA’s main asset, the Sapref refinery in Durban, remains uncertain. 

The refinery has been inactive since 2022 following a spending freeze initiated by Shell and its joint venture partner, BP, compounded by severe damage caused by coastal flooding.

South Africa, grappling with energy security concerns exacerbated by the closure of major refineries like Sapref and Enref, has expressed interest in acquiring Sapref to address its refining capacity challenges. 

However, discussions surrounding Sapref’s future remain confidential, with the Central Energy Fund refraining from commenting due to non-disclosure agreements.

Ozioma Samuel-Ugwuezi 

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Ozioma Samuel-Ugwuezi

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