Shell reportedly close to dispute resolution with South African Thebe Investment Corp over $1bn asset

Energy supermajor Shell and its South African partner, Thebe Investment Corporation,  are nearing a valuation dispute resolution over Shell’s downstream operations in South Africa. According to sources familiar with the matter, the British company’s asset of 600 petrol stations across the country is valued at up to $1bn, Bloomberg reported on January 30.

Thebe has been in a dispute over the valuation of its 28% stake in Shell’s local retail operations since 2022. The company acquired this stake in Shell Downstream South Africa (SDSA) in 2002 for approximately $70mn.

The investment company has a diverse portfolio spanning energy, infrastructure, resources, tourism, and financial services. Established in 1992, it was one of South Africa’s first Black-owned investment companies, with a mission to drive economic transformation and empowerment.

Shell has decided to withdraw from its downstream business in South Africa as part of a broader effort to optimise its global operations. This move follows an in-depth assessment aimed at improving efficiency and streamlining activities across different markets.

The disagreement arose when Thebe sought to exit its shareholding, but both parties struggled to agree on a valuation. According to Bloomberg, the people, who wanted to remain unnamed because of the confidential nature of the matter, indicated that the two companies were now close to resolving the deadlock.

A finalised agreement could see Thebe secure more than the $200mn it initially valued its stake at in 2022, while Shell had placed a lower estimate at the time.

The dispute resolution is expected to facilitate the joint sale process, managed by Rothschild & Co., and provide clarity for potential buyers, including Saudi Aramco, Abu Dhabi National Oil Co. (ADNOC), and global commodities trading company Trafigura.

According to the sources, the submission of binding offers is anticipated in the coming weeks. Shell stated that it did not provide comments on business-related matters, while Thebe could not be reached for a response, said Bloomberg.

Shell and another 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 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.