Global energy giant Shell is reportedly planning to withdraw its retail, transportation, and refining operations in South Africa.
The Zhitong Finance App learned that according to reports, global energy giant Shell (SHEL.US) plans to withdraw its retail, transportation and refining operations in South Africa. The decision was made following a thorough review of the company's downstream and renewable energy business in various regions and markets around the world. Notably, Shell has a long history of business in South Africa, operating in the country since 1902, and currently has around 600 service sites.
According to information, Shell and the Southern African subsidiary of British Petroleum (BP.US) jointly own the Sapf refinery in Durban, the east coast city of South Africa. The plant is the largest refining facility in South Africa, with a daily processing capacity of 180,000 barrels of crude oil. However, the refinery ceased operations prior to its sale in 2022 and was subsequently damaged by floods.
According to a representative lobbying group of fuel manufacturers, the South African government enacted new regulations in 2022 requiring all domestic refineries to meet production standards for low-sulphur fuels by 2023. This policy change caused much of the country's existing fleet to become obsolete because it did not meet the new standards.
Shell indicated as early as 2020 that it was reviewing its shares in the Sapf refinery. As global energy markets change and demand for sustainable energy grows, Shell's move may be part of its global business restructuring and strategic adjustments to adapt to energy transition trends.
It is worth mentioning that in addition to South Africa, there are also reports that Shell is in negotiations with Saudi Aramco, which is owned by Saudi Arabia, to sell its gas station business in Malaysia. The business is the second-largest petrol station network in Malaysia, and the transaction value could be as high as $1 billion.
According to Shell's website, the company wholly owns around 950 gas stations in Southeast Asian countries, second only to Malaysia's state-owned Petronas (Petronas).
A source said negotiations began at the end of 2023 and the agreement could be finalized within the next few months. Two people familiar with the matter estimate that the potential transaction size is about 4 billion to 5 billion ringgit (844 million to 1.06 billion US dollars).
The sale is part of CEO Wael Sawan's effort to focus the company's operations on the most profitable business. Shell has said it will divest 500 gas stations this year and next two years. The company is selling its refinery and petrochemical complex in Singapore.
One of the sources said Shell's efforts to sell its Malaysian gas station are in line with the move to sell its refinery on Singapore's Wu Gong Island, which supplies fuel for the gas station network.