South Africa’s Ministry of Energy has signaled it may grant fewer oil exploration licenses to Shell due to the company’s plans to exit the country’s downstream fuel supply business.
The oil major is selling its stake in Shell Downstream South Africa, which includes a network of 600 gas stations across the country, following a review of its business across all regions and markets. Mineral Resources and Energy Minister Gwede Mantashe said he had requested a meeting with Shell officials to discuss the matter.
Shell’s oil exploration business faced multiple challenges in South Africa, where the company relinquished licenses due to legislative uncertainty. The country’s Upstream Petroleum Resources Development Law has not yet been finalized after a process that has dragged on for years. Environmental groups have also blocked hydrocarbon exploration in South African waters through legal action.
Shell has been considering exiting a significant part of South Africa’s fuel supply business since at least 2021, when it, along with BP, began evaluating the possible sale of its 180,000 barrel-per-day Sapref refinery – the world’s largest processing facility. of crude oil in the country. The factory closed the following year and the government began to consider the possibility of taking it over.
The company “will work to preserve Shell-branded service stations under new ownership through a brand licensing agreement,” it said in an emailed response to a request for comment. He declined to comment on the minister’s remarks.
Mantashe suggested that geopolitical factors may be at play in the exit of Western companies. The minister cited South Africa’s successful prosecution of Israel’s war against Hamas at the International Court of Justice earlier this year, which “doesn’t make the European Union happy with us”, he said.
“The terms of engagement with Shell will be based on our national interests,” Mantashe said.
2024-05-10 21:47:41