Bloomberg News reports that Abu Dhabi National Oil Co (ADNOC) and Saudi Aramco are considering making bids for Shell’s downstream assets in South Africa. The potential value of the business is estimated to be over $800 million. Sasol, a South African company, is also contemplating an offer for the assets. Additionally, Puma Energy, a subsidiary of Trafigura Group, and Glencore are among the other potential suitors for Shell’s South Africa assets.
Several credible parties have approached shell, but the company has yet to make any comments on the issue. The discussions are still in the early stages, and there is a possibility that other bidders may emerge for the assets. Shell had conducted a comprehensive review of its businesses worldwide. After the review, Shell announced its plan to divest its majority stake in a local South African downstream unit.
Shell South Africa Marketing and Shell South Refining merged to create Shell Downstream SA (SDSA). Thebe Investment Corp was involved in the establishment of SDSA. Thebe Investment Corporation held a 28% equity stake in SDSA. Despite opposition from environmental campaigners, Shell continues to explore offshore opportunities in South Africa. The company has been present in the country for more than a century.
Throughout the divestment process, Shell has committed to preserving SDSA’s operational capabilities and maintaining its brand presence. However, one of SDSA’s key assets, SAPREF, located in Durban, South Africa, has been non-operational since 2022. This is due to a spending freeze and halt in operations by Shell and its refinery joint venture partner, BP.
The Central Energy Fund of South Africa expressed interest in SAPREF two years ago as part of its efforts to address energy security concerns.
