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Shell confirms intention to divest from South African downstream operations

Shell confirms intention to divest from South African downstream operations
A general view of a Shell service station. Shell plans to divest its shareholding in Shell Downstream South Africa. (Photo: Gallo Images/Jacques Stander)

Shell Plc has confirmed weekend media reports that it plans to divest from South Africa. This will entail the sale of its downstream assets — effectively the over 500 service stations or forecourts it operates in the country.

“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.

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”.

This confirms weekend reports in City Press and Sunday Times that Shell planned to exit South Africa. Shell provided no comment on the reports that it was also locked in a row with its BEE partner Thebe Investments over the value of the latter’s stake.

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.

The move will mark the end of an era as Shell has been a fixture of South Africa’s energy landscape for 120 years — a presence that saw it targeted by anti-apartheid campaigners in the 1980s.

Shell House in downtown Joburg was the former HQ of the African National Congress (ANC) and was a donation from the oil company to the party.

The move will also be seen as the latest blow to South Africa as an investment destination in the wake of mining giant BHP’s bid for Anglo American minus most of its assets in the country. DM

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  • John Patson says:

    Thebe Investments must be in a strong position to buy the 60% (if reports are correct) they do not own at a knock down price, and presumably have been living the fat life for so long they probably have enough savings to do so.
    Banks, other than Chinese and Indian ones are unlikely to lend the money, and private investment usually want a good slice of the cake… So savings it is. I bet they are trying to knock the price as low as possible.

  • Faith Botha says:

    This is the start of our further economic downfall.

  • Alan Watkins says:

    “Shell Plc has confirmed weekend media reports that it plans to divest from South Africa. This will entail the sail of its downstream assets — effectively the over 500 service stations or forecourts it operates in the country.”

    Aah, harnessing wind power. Admirable!

  • Leon Schipper says:

    Sail? You mean “sale”.

  • Robert de Vos says:

    Some of the facts: “The Batho Batho Trust has tight links to the ANC. It holds about 47% of the black-owned investment group, Thebe, which has a 28% stake in Shell’s downstream business in South Africa.”

    Shell is probably tired of being milked and involved in this corrupt cohort.

    • J vN says:

      Another good BEE and ANC story to tell.

      • Malcolm McManus says:

        Yep,
        They got the “once upon a time” part right, but the “happily ever after” part is somewhat lacking, like most BBBEE stories.

    • Tumelo Tumelo says:

      Whilst South Africa has difficulties it must be said that businesses disinvest for a plethora of reason that have nothing to do with the investments conditions here. For example: they face different liquidity needs, they have lost money in other geographical regions needing to rebalance their position or move to other sustainable industries. My point is, factually, there is more inward investment than disinvestment in this country and the prognosticating of doomsday is tired- since 1994 actually. This discussion is lot more nuanced than your perceptions.

  • Lenka Mojau says:

    This move is mainly in line with energy landscape that is due to change as the race towards clean energy hightens. 10 years from now the country will be flooded with electric vihicles, so anyone who invest in fossil fuel will have to do that with great caution, as returns will dwindle in the future.

    • Terrence B says:

      “Race”? Hardly. They have evidently not even started. Look at the JIT agreement yourself. Majority of the spend is towards consultancy – very little towards infrastructure (grid or downstream), upskilling and transfer of existing labour (nevermind ’employment creation’) et al. Grid will still be heavily reliant on coal for at least 20 years, for economic/pragmatic reasons initially to trade union reasons towards the end. Kusile was meant to take 10 years to complete, we’re now in year 16 and its still defective. Nevermind the chaos that comes with coalition politics in the coming years, we’re not ‘racing’ anywhere.

      “Flooded”? People vote with their feet and their money. Look at general South African consumer sentiment surveys/polls/studies regarding electric vehicles. Netherlands is 4th in the world for EV ownership. 8.2% of the country’s car fleet is EV and 2.8% of fleet. Maybe a “flood” in Europe, but its barely a trickle right now. And that comes with a heavily subsidized EV industry. Infrastructure. Heavy incentives. Cheap energy (and availability). Draconian market interventions and a society heavily in favor of pro-environmental policies.

      People generally don’t care about the environment if they don’t have electricity and can’t put food on the table.

      I could, however, see a scenario where a Chinese manufacturer (like BYD) getting a preferential deal for local EV manufacturing. Maybe if we see an ANC majority (ANC/EFF/MK coalition).

      • D'Esprit Dan says:

        Don’t agree with Lenka that we’ll be flooded with EVs in a decade, which is why Shell is leaving – they don’t want to be in fossil fuel auto jurisdictions. It’s in their 2023 forward looking plan.

    • Terrence B says:

      “They are no solutions, only trade-offs” Thomas Sowell

    • Middle aged Mike says:

      Where do you imagine the electricity for the flood of EVs will come from?

    • Malcolm McManus says:

      I doubt we will be flooded with electric vehicles in such a short period in South Africa. The greater population probably can’t afford such luxuries. Furthermore, whats the point when the electricity these cars use is coal generated and undoubtedly will be still thriving in 10 years time.

  • Random Comment says:

    Hey, LOOK HERE, ANC Voters!
    More job creation!
    More taxes being paid!
    More economic growth!
    More foreign direct investment!
    More broad-based black economic empowerment!

    [*in case you didn’t notice the sarcasm, it’s actually NONE OF THE ABOVE]

    • Tumelo Tumelo says:

      Like clockwork, here we go, the klipdrift with cola comprehension and gossip has commenced.

      • Fanie Rajesh Ngabiso says:

        I’m interested in your comment as this certainly doesnt seem positive to me, and may very well be due to local problematic business issues. Do you feel it is a good thing and if so could you expand on why? Thanks

        • Tumelo Tumelo says:

          Thank you for your question Raj. You often read on these pages that the majority of this country are illiterate and it is reflected in their vote. However, in my years of participating in DM commentary you often see unsophisticated commentary, downright crude, not based on any facts or even a nanoscopic attempt to comprehend the article- just plain gosssip. Now, Shell leaving has nothing to do with its BEE requirements ( as inferred by in most commentary here) , as gleaned from their statement and their worldwide strategic plan from 2023. Shell is closing or closed down their energy retail in Singapore, Netherlands, UK and a whole host of African countries. As I have said in my previous comment (above) there are a multitude of reasons that companies divest which have nothing to do with the investment conditions here. My comment was pointing out that klippies and Skilpadjies braai gossip does not constitute facts.

          • D'Esprit Dan says:

            Absolutely spot on! Shell divesting of its downstream operations and focusing on EV charging stations ‘greens’ its operations quite a bit at a stroke – it’s balance sheet and income suddenly have a much better look to them than if they retained this segment. Anyone with a keyboard and the ability to type a question like “where has Shell divested of downstream assets?” would be able to pick it up in a second. Frankly, the DA doesn’t need to produce flag-burning ads or constantly change feet in mouth when its base supporters reaffirm, every day, that it is a party for the entitled and sneering elite.

          • Middle aged Mike says:

            “Now, Shell leaving has nothing to do with its BEE requirements ( as inferred by in most commentary here) , as gleaned from their statement and their worldwide strategic plan from 2023.”

            There is absolutely no way for you to know that and they’d hardly be likely to state it explicitly if it did factor into their decision. BEE ownership requirements, onerous labour legislation, a militant labour movement, a declining economy, failing electricity supply, endemic corruption in government and all the rest are not attractive to foreign investors so while you may be right about Shell’s motivation in this particular case you won’t be in the many others that are coming as we progress towards kleptocommie nirvana.

      • Random Comment says:

        Tumelo, Which part of the comment is factually incorrect? Jobs? Taxes? Growth? FDI?

        Regarding the BEE statement:
        “Shell could exit SA after BEE partner fallout, risking $73 million of shareholder investments” *City Press
        “Shell and BEE partner’s relationship hits ‘rock bottom’ as oil giant prepares to exit SA” *Timeslive
        “Shell confirms downstream exit amid calls for broad ownership in SA’s liquefied energy sector” *iol

        Please inform those of us with “klipdrift with cola comprehension” commentators where you find your information, as we are reliant on SA Media sources. Thanks in advance for condescending to answer to us klippies & cola plebs. Fnar.

    • Chris Lee says:

      The depressing part is the siren voices on social media along the lines of “let them go, see if we care…” – that I will never understand.

  • Rev Renzi says:

    I guess it’s…Go well Go shell

  • Agf Agf says:

    First it was Caltex/Chevron (now called Astron, with those revolting Orange and Purple forecourts. Who on earth decided on that colour scheme by the way). Now Shell. What it actually is all about is that the parent companies have no faith in South Africa and want to get the hell out as soon as possible. Also all the service stations are owned by franchisees, mostly BEE appointees, who are incredibly difficult to manage and they just can’t be bothered to do it any longer.

  • Sarel Eloff says:

    I have been boycotting Shell service stations for several decades. They have a nasty reputation in Africa.
    For human rights abuses as well
    as environmental atrocities.
    Go to hell Shell…good riddance!

  • Johan Buys says:

    Bye

    When Shell got it wrong on fracking Karoo I stopped using Shell completely. In my town I can see the activity levels of a BP and Shell within 50m of the other.

  • Ian Gwilt says:

    It is the down stream business , which in profit must be small and more hassle than it is worth.
    The supply to the forecourts owned by whoever will continue, a seamless supply one invoice paid in advance.
    The problem is that a number of the forecourts will close with long standing franchise owners and staff going to the wall.
    This is sad, and I agree that it is an indictment on our ability to attract and keep investment with our non attractive fuck the west attitude.
    There are probably some well connected cadres in the wings rubbing their hands at the opportunity.

  • markdeswardt100 says:

    In the words of Mr Buffet. “if you going to panic, be the first to panic”

  • D'Esprit Dan says:

    As usual, the tinned food in the basement brigade are out in full force again! Wow! Just a casual search on the Internet (you know, this thing that led you to DM in the first place) will reveal that: (Shell) has steadily and deliberately been selling downstream assets for over a decade. In 2011, it announced its intention to divest most of its shareholding in its African downstream business (excluding South Africa). This included Botswana, Burkina Faso, Côte d’Ivoire, Guinea, Kenya and Namibia. In 2014, it sold its Australian downstream oil assets (including 900 service stations) to Vitol and the Abu Dhabi Investment Council.

    In 2016, it got rid of its Danish downstream assets (230 retail stations) and last year it disposed of downstream assets in Uruguay, Paraguay and Colombia (a total of over 250 service stations). This is from an article on another site that has a W from world wide you know what and money in it.

    Can I ask a question of all the tinfoil hat commentators on here: were the assets of Shell in Australia, Denmark and the rest of the countries mentioned also subject to ruinous BEE policies? Did the ANC through its proxies milk the operations in Botswana and Paraguay? Or have you all just jumped the shark and drawn conclusions based on, well, nothing at all other than it’s easy to trot out the same boring tropes over and again? I wonder if this comment will make it through the gauntlet of self-imposed censors on here….

    • Errol Price says:

      Actually you need to check your facts. Shell’s 2022-2023 report shows that revenue generated from chemicals and products in that period was $ 118.8 billion- far outstripping any other segment of Shell’s business.
      It should be no mystery why the company is divesting from downstream activities in Africa where the financial and political turmoil, is more trouble than it is worth

      • Geoff Coles says:

        So what you are saying is that Shell is getting out of Retail worldwide, maybe not considered a core competence anymore

        • D'Esprit Dan says:

          Yes. But that would be too simple for conspiracy theory keyboard warriors. Somehow, it MUST be the fault of the ANC!*

          * I can’t stand the ANC, so not defending them, just trying to pour oil (unrefined) on some very troubled waters here.

      • D'Esprit Dan says:

        From the Shell Chemicals website (since you asked me to check my facts):

        “Shell Chemicals manufactures and supplies a wide range of petrochemical ‘building blocks’ to industrial customers in all parts of the world. Countless products that we all need and use every day in our homes, our cars, at work, or while we relax owe their beginnings to these key raw materials that we provide.”

        Now, that suggests to me that the retailing of fuel is just one part of that US$118.8bn and that given that they produce ‘countless products used in our everyday lives’ it’s probably not the be all and end all of their business. Let’s face it, if it was a key component of their revenue, they wouldn’t be slowly exiting from markets across the globe.

        In terms of your sweeping ‘Africa’ generalisation, the last time I checked, Australia, Denmark, Uruguay, Colombia, Paraguay and Pakistan were not in Africa. And yet Shell pulled the plug on those markets too.

    • Middle aged Mike says:

      Saying that the ANC and it’s proxies extract rent everywhere they can is hardly a trope. It may be boring in the consistency with which it’s proven to be the truth though.

      • D'Esprit Dan says:

        It is when it’s demonstrably false – as in this case. Again, I hold no candle for the ANC as anyone who reads my comments will know, but the leap into logical darkness by so many people here on this issue is one of the reasons the DA is stuck 10% below the ANC pass mark: it and it’s followers can’t read a room for meaning.

        • Middle aged Mike says:

          Demonstrate the falsehood if you can. Making a causal connection between the assumption that the ANC extracts rent from anything it’s connected to and the electoral performance of the DA is illogical. Voters don’t want what the DA has to offer. It could only grow any bigger by having an entirely black leadership and by making impossibly silly promises. That’s what works for the ANC, EFF and possibly MK.

          • D'Esprit Dan says:

            It’s false because Shell’s decision has nothing to do with the ANC’s BEE cronies – it’s just a business transaction. That’s what I was alluding to. In terms of the DA not being able to grow, it definitely could if it stopped shooting itself in the foot at very given opportunity it has: the complete lack of understanding of the pulse of the nation is the DA’s (biggest) Achilles Heel and is manna from heaven for anyone who wants to take a swipe at them. How often do DA supporters post here that it doesn’t matter what bloopers they, and particularly Steenhuizen and Zille make in public, as long as they get the job done? Well, it does matter to people who aren’t their base supporters and who yearn for something they can identify with. But the DA and its base simply refuse to acknowledge that they have room for growth if they change the messaging from doom and gloom and bashing everyone else, to driving home a relentlessly positive message and one that focuses on their successes. Apparently the foreword to their manifesto mentions the ANC 13 times. WTAF? Bill Clinton (it’s the economy, stupid) and Barrack Obama (yes we can) got it. The DA doesn’t. Written by someone who has voted DA, DP, PFP his whole bloody voting life back to 1987.

          • Middle aged Mike says:

            You weren’t involved in the decision so can’t claim to know what went into it. I agree that it’s in line with trends in Shell’s disinvestments elsewhere but to suggest that BEE, corruption, demented labour legislation and a rapidly collapsing economy, all the good work of the ANC, weren’t taken into consideration is Pollyanna in the extreme. The DA is a ‘white’ party and don’t make obviously BS promises and therefore doesn’t appeal. ‘Tone deafness’ and flat out lies and a stellar track record of theft and corruption don’t have much perceivable negative impact on the prospects of other parties so I don’t buy the idea that’s the reason for the majority of voters not voting for the DA. If voters don’t value service delivery and clean governance there’s not much to be done about it. You might not like to consider this but it’s very clear to me that we have a low quality voter problem and that’s exactly why we have such a staggeringly low quality government. I see no prospect of that changing any time soon.

  • Gary Palmer says:

    For Shell to divest is an eye opener and shocker, but their reasons don’t make sense.. Africa, yes we are properly part of the African continent and don’t stand out as the leader in much any longer, has a long way to go for any EV initiative to make sense.

    There are far bigger issues than getting EV numbers up. There is hardly security in power let alone keeping what’s there, in place. The basic needs of South African citizens are to meet the daily and monthly needs. Calculating the incredible low cost of driving an EV is not even a sniff in the wind, considering the high investment required to own one.
    And we love a road trip! Trying to do a Joburg Cape Town trip in a day (some of us still like the challenge) is out of the question. And what about running off to a quiet dorpie to do business for the day, where are the charge stations on all those hundreds of routes.

    We have a long way to go for EV to be defacto. There are other reasons for Shell leaving, maybe they are leaning more towards ‘ethical’ methods of business..

    • D'Esprit Dan says:

      Or if you read their business plans, they’ve been divesting of their downstream operations for over a decade now – from Latin America to Scandinavia, Africa, parts of Asia and Australia. It may not sound nice to us as consumers here, but it’s coming for some time.

  • Geoff Coles says:

    I hardly ever bought Shell petrol unless there was no alternative in the smaller towns. All due, a few decades back, to the treatment of staff at one of their forecourts by the owner.

    • bigbad jon says:

      I stopped using Shell when they insisted on fracking the Karoo. Their plans were later called off due to opposition by eco-groups, but that’s what they wanted. Their plans for ‘seismic surveying’ (blasting) along the Wild Coast confirmed my decision, their attitude towards our environment is deplorable. We won’t miss them..

  • It seems that this is typical of multi-national companies moving into a country that they only do so when the resources are available at a cheap labor cost. Once the resource is depleted then the said company pulls out leaving the employees high and dry (out of work). In other words “rape” the country of its resources and say “bye-bye” after they’re finished with “extracting the resource”. This is the business model of many multinational businesses.
    As for Shell, they came into South Africa at a time when the country offered very cheap labor for over a century, now that BRICS and it’s new affiliates are beginning to show some sort of force along with load shedding (yes load shedding drives the cost of petrol and other oil products up) Shell executives took a look at least 2 years ago and thought to themselves… maybe it’s time that South Africa had a great run but now it’s time to leave. Their excuse to possibly change their stations to charging stations may or not turn out to be a good thing. A few auto companies are slamming the brakes on electrified vehicles saying that the batteries that run the autos use a rare metal that is mined by children (I don’t know if this is true). Instead, they’re switching to Hydrogen saying that the only byproduct is water.

  • It’s true, Shell has played a very significant role in South Africa’s Economic Landscape .At the news of downstreaming and divestment, what is it, and what are it’s implications,what does this mean?

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