Shell Downstream SA chair Aluwani Museisi says the proposed sale of its noncore retail business has piqued interest from a plethora of possible bidders wanting to snap up the strategically located assets.
After a comprehensive review of the downstream and renewables businesses across all regions in May, the British multinational oil and gas company announced it was disposing of its “noncore” retail business, which houses its service stations, and turning its focus to its upstream operations — which are facing serious legal challenges from environmental groups.
Addressing media at the company’s Alberton depot on Wednesday, Museisi said the portfolio decision by Shell Plc to divest from the downstream business meant a change in the shareholding of the business but not an alteration in the business’s operational capabilities.
“Meaning every line of business that Shell Downstream SA runs today will continue to run even with a new shareholder,” he said. “We believe it’s a brand that’s well loved in SA and our intent is to retain the brand in-country but then just have a new shareholder operating the business.”
Boasting a 122-year history in SA, Shell’s main business activities in the country include its retail and commercial fuels, lubricants and oils, aviation, marine, manufacturing and upstream businesses.
The chair said having garnered significant interest in the downstream assets, which include more than 500 service stations countrywide, negotiations with possible suitors were ongoing, but he would not be drawn on more details.
“We’ve had very good interest because it’s obviously an important asset that a lot of people would really like to get their hands on,” Museisi told Business Day. “It has proven to be resilient and more than that, if you look at our retail network, it’s strategically located in the country so anybody who becomes the new investor will be fortunate because the brand is also well established in this market.
“The depots that we have in the network are part of the sale because they support the retail business.”
Bloomberg reported Saudi Aramco, Abu Dhabi National Oil Company (ADNOC), and commodities trader Trafigura were among those circling to possibly acquire Shell’s service stations in SA.
The assets have also reportedly attracted initial interest from SA’s Central Energy Fund, which owns PetroSA.
The divestment comes as Shell is working to reduce its exposure to the downstream industry globally and is selling its SA forecourt assets as part of that global portfolio realignment.
Reuters reported that Shell was in talks with Saudi Arabia’s state-owned Saudi Aramco to sell its petrol station business in Malaysia.
The oil and gas major in November also entered into a sale and purchase agreement with Brazil’s state oil company, Petrobras, relating to the divestment of its downstream businesses in Uruguay and Paraguay as well as “certain assets” in Colombia. Shell recently disposed of its downstream business in Pakistan to Saudi Arabia’s Wafi Energy.
Museisi said the group would continue running the upstream segment in SA alongside a non-operated entity called Daystar that would be focusing on the solar side of the business.
Shell’s upstream business in SA includes the exploration and extraction of crude oil, natural gas and natural gas liquids in the Karoo and off the Wild Coast.
However, the group’s exploration activities have been stalled by a protracted legal fight with coastal communities and environmentalists who believe the company’s plans for oil and gas exploration are harmful to the environment and the communities that live there.
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