Shell’s divestment from SA follows global energy trends

Although Shell plans to sell off its service stations and refinery, it will retain its explorative and extractive activities in the Karoo and off the Wild Coast.

By Outlier Reporter
Monday, May 13, 2024

Shell confirmed in early May that it plans to sell its South African downstream assets, which include its service stations and refinery. It will, however, be retaining its upstream business – the explorative and extractive activities in the Karoo and off the Wild Coast.

The energy group owns about 40,000 fuel service stations around the world. Half the stations are in the Americas. There are 591 retail outlets in South Africa, its 13th-most among the 61 countries where Shell has a presence.

Its refinery in Durban has been inactive since the end of March 2022, when it was decided to suspend operations and spending. The plant was severely damaged in floods a month later.

Shell says its decision to divest in South Africa is part of a comprehensive review of its global operations.

For the past 10 years, it has been selling off downstream assets in Australia and Africa, including in Botswana, Burkina Faso, Côte d’Ivoire, Guinea, Kenya and Namibia. It has also been scaling down in Malaysia and South America (Uruguay, Paraguay and Colombia).

Refuelling

South Africa’s roughly 4,000 service stations are split between 6 main fuel retailers. Shell owns the third-most stations, with Engen owning more than double that.

In 2017, 850 Caltex service stations (as well as the refinery in Milnerton) were rebranded as Astron after US multinational Chevron sold its 75% stake in Chevron South Africa.

Plugging in

Shell says it is planing to ‘accelerate to zero emissions’ by supplying lower-carbon fuels, such as liquid natural gas, and that it intends to become one of the largest providers of charging stations for electric vehicles.

Internationally, the company has about 55,000 public charge points at forecourts. It says it hopes to quadruple this number to 200,000 by 2030.

Most of these stations are in Europe, which is seeing a brisk uptake in electric vehicles (EVs). The UK sold more than 450,000 last year, according to data from the International Energy Agency.

Shell has also opened recharging stations in China and the US, where EV sales have increased by 611% and 372% respectively since 2020.

Sales in South Africa lag far behind. Only 1,080 EVs were sold last year. The high price tag of the vehicles and the relative dearth of charging stations are two of the reasons why local sales have been slow.

Despite the fact that most South Africans still drive ICE vehicles, the amount of petrol being sold is decreasing. One of the lasting effects of the Covid-19 lockdowns in 2020 and 2021 is that more employees are working from home.

Notebook