Gunvor, ADNOC reportedly shortlisted to buy Shell’s downstream assets in South Africa

The UAE’s Abu Dhabi National Oil Company (ADNOC) and Swiss energy commodities trader Gunvor are among companies that have been shortlisted to buy British energy supermajor Shell’s downstream assets in South Africa, according to sources familiar with the matter. 

As reported by Bloomberg on April 18, the two companies were leading a group of bidders for Shell Downstream South Africa’s (SDSA’s) assets of 600 petrol stations across the country. Previous contenders, including Trafigura’s Puma Energy, South African energy and chemicals company Sasol, and national oil and gas company PetroSA, were no longer on the list of potential buyers, said the sources, who asked to remain anonymous as the information was private.

Shell has decided to withdraw from its downstream business in South Africa as part of a broader effort to optimise its global operations. The company says this decision follows an in-depth assessment to improve efficiency and streamline activities across different markets.

“While ADNOC Distribution regularly reviews opportunities for domestic and international growth, we don’t comment on market speculation,” ADNOC’s fuel retail unit said, as cited by Bloomberg. According to the media agency, Shell, Gunvor, Trafigura and Sasol declined to comment, while PetroSA did not immediately reply to a request for comment.

SDSA’s assets are valued at up to $1bn, and the sale process is managed by financial adviser Rothschild & Co. Talks are continuing, and a winner could be announced in the coming weeks, the sources told the news agency. However, there was no certainty that there would be a final sale. According to the people, Saudi Aramco was also involved in the bidding process, but it was not clear if it would continue to participate as Aramco declined to comment.

Shell’s South African assets appeal to trading companies as they guarantee demand for fuels that these firms can supply. ADNOC and other Middle Eastern oil giants have been growing their trading divisions as part of efforts to enter new markets, Bloomberg writes.

A successful deal would provide the purchaser with control of around 10% of South Africa’s fuel retail outlets. According to the news agency, the country’s fuel retail landscape has shifted notably in recent years after multinational trader Glencore acquired Chevron’s Caltex-branded service stations, while Vitol Group’s Vivo Energy completed its acquisition of Engen, South Africa’s largest filling station network.

Shell and fellow British energy supermajor BP, former co-owners of Sapref, South Africa’s largest oil refinery, sold the facility to the state-owned Central Energy Fund for a symbolic price of ZAR1 (equivalent $0.05). The sale followed the oil companies’ decision to halt refining operations at the site in 2022, citing strategic considerations and cost challenges, as previously reported by NewsBase.

The sale of Shell’s controlling stake in SDSA will mark the conclusion of the London-based oil and gas giant’s 120-year presence in the country’s downstream industry.